Q4 2009 Middle-Market Private Equity Status

GF Data Resources has released fourth quarter statistics that show a continuation of the trends reported throughout much of 2009.

Based on market data reported by 140 active private equity firms and our own observations in the marketplace SDR has identified 2 strong themes for 2009; both surmised appropriately by GF Data Resources in calling 2009 “The Year of Not Living Dangerously.”

Deal Volume Remains Low
For Fiscal Year 2009, GF Data’s 140 active contributing private equity firms have completed  65 deals; a striking contrast to the 124 completed deals reported for Fiscal Year 2008.  Quarterly deal volume in 2009 continued showed signs of an uptick in Q4, showing some alignment with volumes seen in the Q1 2008.  From a volume perspective, the Year of Not Living Dangerously effectively saw less than half of the reporting private equity firms leaving the sidelines in 2009.

Source: GF Data Resources

Leverage Remains Conservative
With small fluctuations, total debt involved in these private equity transactions averaged about 2.5x adjusted EBITDA throughout 2009, and senior debt about 1.7x.  In contrast, the total debt and senior debt leverage figures were 3.5x and 2.5x, respectively, leading up to the credit crisis in Q4 2008.

Anectdotally, SDR has witnessed an apparent loosening in leverage on $10-million-plus EBITDA transactions and very little, to no, loosening in leverage on $10-million-or-less EBITDA transactions.  Statistically, the Q4 data shows early signs supporting both of these observations.

Source: GF Data Resources