Thinking About Where Market Exits Are Going in 2021

With an amazing, sad, crazy, and unprecedented year behind us, the private equity world is looking at 2021 for a boost in activity.

Before looking at the 2021 picture, what was the exit activity like in 2020? Let’s have a look.

Global Median PE Exit Size by Type

The first look is at the global median private equity (PE) exit size by type of exit. According to Datasite’s analysis of Pitchbook’s data, the global median PE exit for IPOs reached an incredible $697.9 million, well above the previous high of $588.0 million in 2013 and a healthy jump from 2019’s $503.1 million.

For buyouts, the median PE exit reached $292.5 million, also reaching a 15-year high. The previous high was 2019’s $272.0 million.

The picture for acquisition PE exits is a little less rosy. The median value for 2020 was $126.2 million, down from 2019’s $133.5 million and 2018’s $150.9 million. The pandemic was not exactly a wonderful experience for acquisition PE managers.

A Look by Region

The global PE picture is even more interesting when looking by region. In term of the number of PE exits, North America accounts for around half of all exits, up slightly from 2019. The area with the next highest percentage of global exits is Europe and around 40%. Areas making up the remaining 10% include Asia, Africa, the Middle East, and the rest of the world.

Challenges and Marketing

The Datasite report provided an interesting view of PE’s take regarding two questions. The two questions were:

• When marketing as asset for sale, how efficient and effective are PE’s current process of identifying, marketing to, and tracking potential buyers?
• When marketing an asset for sale, what is the most challenging for PE?

On the former question, an amazing 70% was captured in the medium level, while on the latter question, an almost majority of respondents (49%) said that lack of insights on buyer behavior across mandates was the most challenging issue for PE.

What Did PE Professionals Help Out With?

Lastly, shifting to what PE professionals actually did in moving the exit forward, the following figure from Pitchbook answers the question: “When PE thinks about sell-side M&A areas, which is the most time consuming?” Interestingly, a whopping 54% of PE’s time was spent on deal preparation. Far behind in second place was negotiation at 28%. Rounding out the top three was asset marketing at 14%. The remaining 5% of PE’s time was spent on post-merger integration, closing, and exit.

Conclusion

Overall, the 2021 year for private equity appears bright. New ideas are flowing, financing is cheap, and demand for professional investments is at an all-time high. The 2021 could turn out to be as positive year in private equity as the world has seen in a long time.