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Sponsors ramp up acquisitions

Global M&A has had a fantastic year so far, largely thanks to strategic buyers and their plethora of high-value deals. Overall strategic M&A volume grew 60% to $1.78tr this YTD from $1.11tr in 2017 YTD.

However, financial sponsors have also had a part in that growth. Sponsor entry deals have finally started catching up with the over-accumulation of dry powder within private-equity (PE) funds this year, with sponsor M&A entry volume reaching its highest YTD levels in 11 years. In 2018 YTD, volume for such deals grew 64% year-on-year to $157.3bn—accounting for 8.8% of overall M&A volume.


Financial-sponsor M&A YTD Entry vs. Exit

Record high valuations for sponsor entry M&A

On the other hand, high valuations have likely kept PE firms from being even more active in deploying capital. The median EV/EBITDA1 on sponsor entry M&A deals this YTD reached a record high of 14.9x. Curiously, the high valuations have not translated into a seller’s market, as sponsor M&A exit volume has fallen below entries for the first time since 2013 YTD.


Median EV/EBITDA on Sponsor Entry M&A YTD


Largest Sponsor Entry M&A Deals – Announced 2018 YTD


1. EV/EBITDA analysis excludes targets in finance, insurance, and real estate, as well as targets with negative enterprise values or EBITDA.

– Written by Andrew Philbey
Data source: Dealogic, as of May 9, 2018

Contact us for the underlying data, or learn more about the powerful Dealogic platform.


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