Private equity’s share of terminated M&A deals ticks up in Q4

Private equity’s share of terminated M&A deals was on track to grow again in the fourth quarter after declining over the previous three-month period, according to S&P Global Market Intelligence data.

Through Dec. 15, private equity or venture capital had a hand in three out of the 30 deals canceled globally in the fourth quarter, or 10% of all terminated deals. If that rate holds through the end of the year, it will nearly double their 5.1% share of M&A deals called off in the third quarter.

Private equity-involved deals accounted for about 10% of all terminated deals by volume in 2021. The average was on track to come in slightly higher in 2022 at about 10.5% of all terminated deals by volume based on data collected through Dec. 15.

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With just 30 M&A deal terminations announced between Oct. 1 and Dec. 15, the fourth quarter was on track to have the fewest canceled deals of any quarter in at least two years. On average in 2021, there were nearly 215 terminated M&A deals recorded globally each quarter.

PE’s share grows

Private equity’s share of the value of terminated deals grew even more in 2022.

Of the $192.21 billion worth of terminated M&A deals in 2022 through Dec. 15, private equity was involved in deals with an announced value of $66.29 billion, or about 34.5% of the total. In 2021, private equity was involved in $153.66 billion worth of terminated deals, or about 28.6% of the $537.4 billion global total that year.

A private equity or venture capital firm was the seller in all three of their terminated deals in the fourth quarter so far. That was the most common scenario for a private equity-involved terminated deal in 2021, when it accounted for 50% of all PE-involved terminated deals. Private equity has been the seller in more than 56% of its terminated deals so far in 2022.

Largest terminated deals

The largest PE-involved terminated deal since the start of 2022 was KKR & Co. Inc.’s $23.03 billion bid for Australian hospital operator Ramsay Health Care Ltd., announced in April. When the deal was terminated in September, Ramsay’s share price had fallen 12.2% since the start of the year.

KKR was on the other side of the private equity industry’s second-largest terminated deal of the year. Unity Software Inc. offered to buy KKR portfolio company AppLovin Corp., an app technology platform, for $17.55 billion in August but canceled the deal to pursue a merger with ironSource Ltd., a different app business.

Valuation concerns spoiled the third-largest PE-involved terminated deal so far in 2022, Apollo Global Management Inc.’s plan to buy U.K.-based educational publisher Pearson PLC for $8.59 billion. Despite an increase over a bid Apollo originally submitted in November 2021, Pearson’s board rejected the offer and said in a statement that Apollo “significantly undervalued” the company.

Source: S&P Global

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