- Sponsor-led activity (2,431 buyout deals worth USD 679bn) has accounted for 30.1% of the overall M&A activity in the US by volume and has recorded a 161.7% increase by value compared to the same period in 2020 (USD 259.5bn).
- The median all-sector buyouts EBITDA Multiple for 2021 stands at 20.7x, a steep increase from the previous year (14.2x in 2020).
- Leveraged loan and high yield bond issuance backing buyouts set a record in 2021, with leveraged loan volume up 98% from last year to USD 212.7bn, and high yield bond activity of USD 27.6bn for a year-over-year gain of 75%.
- Larger average deal sizes from issuers such as Medline Industries (USD 7.8bn) and PAREXEL International (USD 4.1bn) helped push loan issuance 19% above the previous high set in 2018 (178.5bn) as larger financings returned to the market - compared to 2020, when 18% of loan buyout financings were USD 1bn in size or greater, the 2021 figure has increased to an impressive 25%.
- First lien institutional loan pricing on LBOs moved up to an average margin of 408bps – its highest level this year - and an average LIBOR floor of 54bps, compared to 76bps in 4Q20. Original issue discounts also ticked up modestly, to 87bps from 76bps last quarter. Similarly, high yield bond pricing widened to its highest point this year, at 7.48%.
- Technology continues to fuel investor appetite and has accounted for 36.8% of the total buyout activity in the US by deal count with USD 266.4bn changing hands across 895 deals. In terms of deal count. It was followed by the Business Services sector (312 deals worth USD 84bn) and the Industrial & Chemicals sector (311 deals worth USD 44.9bn).
- Business services firms led the way in terms of total issuance, at USD 64.0bn across 55 deals. Industrial & Chemicals borrowers were next, with USD 47.4bn in debt across 64 deals in 2021, followed by Technology (USD 37.8bn across 32 deals).
- Total leverage levels on buyout deals fell to an average debt to EBITDA ratio of 5.8x in 2021 from 6.0x in 2020, when 26% of LBO financings carried a leverage ratio greater than or equal to 7x, compared to only 16% in 2021.