GF Data Reports Highest Middle-Market Private Equity Deal Volume in Eight Quarters

Rebound in Valuation, Deal Volume and Leverage in Full Swing

PHILADELPHIA---GF Data's 2010 Year End Report reveals deal volume in the middle market surged ahead in 4Q 2010, marking the most deals done since the onset of the economic crisis, and reflecting continued improvement in the overall M&A market. The 155 private equity firms currently contributing to GF Data reported 58 completed transactions in the fourth quarter of 2010, closing out the year with a total of 147 completed deals.

For the third quarter in a row, completed deal volume was about double the rate of activity in the same period in 2009. PE firms in the GF Data universe completed 100 deals in the last six months of 2010, compared to 46 in the second half of 2009.

Average pricing held steady at 6.1x trailing 12 months adjusted EBITDA, the level reached in 3Q and the highest value since the first half of 2009, when "a flight to quality" pushed averages upward on lean volume.

The GF Data subscriber database now includes information on 1,104 transactions closed between January 1, 2003, and December 31, 2010 with enterprise values of $10 million to $250 million. For information on subscribing, or on contributing data as a private equity participant, visit www.gfdataresources.com. The full 4Q Report is available to subscribers only.

"We expected the 4Q report to reflect a lot of activity, based on the general sense of market improvement," said Andrew T. Greenberg, CEO and Co-Founder, GF Data. "However, we never expected the quarter to be a peak unto itself, driven by tax anxieties and other considerations. There was plenty of momentum earlier in the fall, and we see every sign that this tempo will continue through the early months of this year."

"The broader market dynamics beginning to take hold in the fall continued into 4Q. The premiums being accorded for better performing businesses and for larger deals have never been higher," said B. Graeme Frazier, IV, Principal and Co-Founder of GF Data. "Total and senior debt multiples also held steady from 4Q, confirming that debt availability continues to improve at least somewhat in the middle market."

Data Highlights:

  • High-level valuation and volume data for the past eight quarters follows. GF Data Resources' reports provide data contributors and subscribers with more detail on valuation, capital structure, leverage, and key deal term trends.
  • The "quality premium" discussed in recent GF Data reports continued to be present in full force in 4Q. "Above-average" financial performers purchased in 4Q 2010 were valued at a 12 percent premium to lesser performers. 
  • The widening "size premium" reported on in the GF Data3Q report is also in evidence in the year-end data report.
  • Leverage multiples expanding at a greater pace than valuation multiples means that the unprecedented percentage of equity contributions reported through the first half of 2010 have begun to recede.

About GF Data Resources
GF Data Resources collects, analyzes and reports on middle market private equity sponsored M&A transactions with enterprise values of $10 million to $250 million. Contributors and subscribers have exclusive access to detailed quarterly reports, including extensive valuation and leverage data, breakdown by NAICS code through GFDR's searchable online utility, and a new key deal terms quarterly report. The data provides private equity firms and other users more reliable external information to use in valuing and assessing M&A transactions. Transaction information is collected from private equity groups on a blind and confidential basis. Data contributors and paid subscribers receive two products -- high-level valuation and leverage data in electronically delivered quarterly reports and continuous access through the web site to detailed valuation data organized by NAICS industry code.

(originally published in the March 2011 eNewsletter)