With limited legal obligations demanding financial transparency, the private equity industry has the benefit of keeping the terms of most of its deals private. But when it comes to public-to-private buyouts, PE firms have no such luxury. That can be either good news or bad news depending on the return—nobody likes to have a poor deal made public—but for analysts on the outside, it provides a more thorough look at PE investments regardless of how they fared.
In 2017, a year when US PE dealmaking took a hit overall, public-to-private buyouts suffered as well, though at a slightly lower rate. With roughly two weeks remaining in the year, PE firms are on pace to spend a combined $59.7 billion in public-to-private deals in the US, according to the PitchBook Platform.
That marks a 36.2% YoY decrease compared to the $93.5 billion in combined take-private deals in the US in 2016, giving this year the lowest total since 2014. Deal count has dropped as well, but less sharply: PE firms have taken 43 US-based companies private in 2017 thus far, just slightly off last year's pace of 48.
Here's a look at completed US-based take-private buyouts since 2008:
Why the decline in money spent? With the stock market at historically high levels, PE firms dipping into the public market have sometimes had to focus on smaller or less expensive targets instead of chasing public equities that are approaching record prices (or avoid the public sector altogether). The former trend shows in the numbers, with the average public-to-private deal price in the US dropping to $1.42 billion this year. While that amount is not out of the ordinary in the years since the financial crisis, it pales in comparison to 2015 and 2016. Last year was particularly pricey: In 2016, the average public-to-private deal cost $1.99 billion, the highest amount since at least 2008, per PitchBook data.
The B2B sector in particular has been strong, with 27.9% of take-private buyouts in the US this year occurring in that space. It's the highest percentage of B2B take-private transactions that companies have attracted since 2008. This year, PE firms have also been more prone to take US healthcare companies private than in the past few years. That sector has accounted for 16.3% of all take-private deals, which marks the highest percentage since 2012.
Despite the drop in overall activity this year, there's no shortage of high-profile deals. The largest came in July when JAB Holding, a buyout shop based out of Luxembourg, bought Panera for $315 per share in cash, or about $7.5 billion. The second-largest came when Sycamore Partners closed a $6.9 billion deal to buy office supplies retailer Staples in September. And, as is common, Blackstone pulled off a blockbuster of its own, leading a group of investors that took TeamHealth private for $6.1 billion in February.