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Private equity hits record high with buyout deal value reaching $1.1tn in 2021

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RIYADH: Private equity hit a record high in 2021 as buyout deal value reached $1.1 trillion, doubling the previous year’s total value of $577 billion, revealed a new report from Bain & Company. 

The increase was driven by deal size, as the number of deals having a value of greater than $1 billion almost doubled in 2021, with the average deal size reaching $1.1 billion for the first time.

This rise in 2021’s deal value has been attributed to the sheer volume of capital in the market.

These are among the findings that the international consulting advisor to private equity investors has mentioned in its 13th annual Global Private Equity Report release on March 17.

“Given the high prices paid in 2021, there will inevitably be an increase in pressure on deal sponsors to deliver results this year,” said Hugh MacArthur, global head of Bain & Company’s Private Equity practice. 

He warned that the ripple effects of the Ukraine conflict would be felt far and wide. “The most obvious impact will be on oil & gas supplies, which now face both political and physical risks.” 

Amid the chaos, MacArthur pointed out that investors will be challenged to gain conviction around a most-likely scenario. “Rather, private equity investors and their portfolio companies will need to plan for a wider-than-normal range of scenarios and watch closely as events continue to unfold,” he added.

The report further explores key themes in 2022, including pressures on ESG metrics, a shift toward deal-making in Asia, and inflation. 

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