PE Tapping Public Market Strength

July 20, 2021 | Hayley Kane, Research Associate

Two charts showing private equity exit activity. Chart subtitle: PE exits and exits via IPO have increased meaningfully YTD. First chart description: Left y-axis for columns shows PE exits by billions of dollars, ranging from $0-450. X-axis shows years 2011-H1 2021. Right y-axis for line shows exit count ranging from 0-1400. 2021 so far has had 676 exits at a value of $356 billion, on pace to beat the records of 1328 exits in 2015 and $421 billion in exit value in 2018. Second chart description: Stacked column chart showing percentage of exits by type from 2011 through H1 2021. At bottom of each column, corporate acquisition, middle category is public listing, and top of column is sponsor acquisition. 2021 has seen a significant increase in public listings so far. Note: Latest available 3Q20 Federal Debt as % of GDP used as proxy for 4Q20 Federal Debt as % of GDP. Chart source: PitchBook; U.S. data as of June 30, 2021.

Private equity exits are set to break record numbers in 2021. In 2020, there were 947 exits worth $367 billion, and in 2019 there were 1,111 for a total $323 billion. Already this year, in the first half of 2021, there have been 676 exits for $356 billion. At this pace, the year is on track to surpass both the previous highs of 1,328 exits in 2015 and $421 billion in exit value in 2018.

Along with the number of exits increasing overall, the percentage of exits via IPO has increased significantly this year. In 2019, the fear of a recession kept private companies from wanting to go public. Once a private company hits the market, PE sponsors keep their shares, now subject to public market dynamics, for an average of three years. Risk of a looming recession or lack of confidence in the public market can deter private company owners from pursuing this path. Alternatively, the increased use of public market exits year-to-date may represent private owners’ more bullish outlook on the market. We will continue to look to leading indicators like private market sentiment to help inform our own market expectations and client recommendations.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Hayley Kane
Research Associate

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