June 2012 Was Likely the Most Active M&A Month Since Early 2011

For weeks we have been blogging about the overall weakness in the PE industry and specifically about weaknesses in capital formation, deal activity and most of all about how few investment exits there were in the industry. Just last week, we blogged about the poor May 2012 results vis-à-vis May 2011 and we like many others speculated that June 2012 and Q2 2012 as a whole could be as poor a month/quarter as Q1 2012 (which was one of the PE Industry’s poorest quarters in several years).

Most recently, we blogged about a Merrill Corporation study on PE industry performance in May 2012 that showed that deal activity plunged by 32%. Yet, just days after Merrill published its report, Preqin was out with its first data on Q2 2012. The Preqin study showed “Deal flow increases [of] 37%; [and] exit value surges [of] 65% from Q1 2012”

While we do not have specific data yet for June, we can only conclude that June must have been a deal filled month!

In hindsight, this big rebound in activity should not have been a complete surprise. As Bain and Company concluded in May 2012 in their 2012 report on the PE Industry, the PE Industry was: “An industry awash in commitments, with nearly $1 trillion in dry powder. Almost $2 trillion worth of assets still on general partners’ books, more than 75% of them valued below carry hurdle rates”. The report went on to say that hundreds of billions of dollars was going to have to be put in play before the end of 2012. Accordingly, while most assets were still not in an ideal position to be flipped i.e. a sale would not create the return PE firms sought; those assets were being forced to be put into play nevertheless.

More than that, while June activity was very strong, activity for the rest of the year may turn out to be even stronger still.

For much of the time we have been blogging on this subject we have also been talking about how growth planning could greatly assist PE firms in building the value of their holding over the long term. With the imminent switch in focus to PE firms needing to increase value of their holdings for exit deals, it is also worth noting how much value may be generated simply by developing credible growth plans and by highlighting that potential and those plans during the deal/valuation phase of a deal.

For a complete look at the Preqin press release about Q2 2012 M&A activity, follow the following link:


For a look at the Bain and Company report for the 2012 PE Industry, follow the following link: