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European Private Equity Activity Survey 2007: Insights and Trends

This comprehensive analysis of the 2007 European Private Equity Activity Survey, conducted under the leadership of Professor Stefano Caselli of Bocconi University, provides an insightful look into fundraising, investments, and divestments across the private equity landscape. The study, leveraging survey questionnaires and reliable public sources, reveals that while fundraising remained strong despite market pressures, mid-market buyouts and expansion investments drove deal activity. Notably, trade sales were the primary exit strategy for venture-backed firms, while buyout-backed companies were mainly sold to other private equity firms.

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European Private Equity Activity Survey 2007: Insights and Trends

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  1. Prof. Stefano Caselli, member of Governing Body of PEREP_Analytics™ Professor of Banking and Finance, Bocconi University Milan 2007 European Private Equity Activity Survey

  2. Methodology • Data collected via survey questionnaires and reliable public sources (coverage rate by number of players: 60%) • Europe: for deals, it is defined either by the location of PE firm or of target as referenced in the source; for fundraising it covers funds managed from Europe or 100% targeted to Europe; • Fundraising: only formal closings included with committed amount; • Investments: only equity value captured, debt also IF provided by PE funds (bank leverage excluded); • Divestments: measured at amount at cost divested (not proceeds).

  3. Evolution Activity Flows Source: PEREP_AnalyticsEurope = location of PE firm

  4. 2007 Fundraising – Profile Incremental amount raised for each 2007 closing Source: PEREP_Analytics

  5. 2007 Fundraising – Profile Incremental amount raised for each 2007 closing Source: PEREP_Analytics

  6. 2007 Fundraising – Profile Full amount raised at 2007 final closings for independent funds Source: PEREP_Analytics

  7. Typology of LPs behind the 2007 fundraising Source: PEREP_Analytics

  8. Location of LPs behind 2007 Fundraising 4.3%  North America 26.4%  21.3% 5.5% 5.8% 12.2%  Rest of World 14.3%  0.9%  AustralAsia 9.3% 

  9. 2007 Fundraising by Country of Management 6.3%  56.2%  4.2%  10.5%  2.2%  20.6% 

  10. European investments at €68.3 Billion (Equity only from private equity funds) Source: PEREP_Analytics Europe = location of PE firm

  11. INVESTMENTS BY STAGE By amount inv By number inv Growth Rate Amt 2007% share 2006 % share 2007 % share 2006 % share 07/06 Mega buyouts 17.7% 26.1% 0.5% 0.4% -31% Large buyouts 20.4% 10.2% 1.0% 0.4% +103% Mid - market buyouts 32.5% 25.9% 7.9% 3.7% +27% Small 6.8% 6.8% 18.6% 18.4% +1% All buyouts 77.4% 68.9% 27.9% 22.8% +11% Replacement capital 5.7% 5.2% 1.8% 3.6% +11% Expansion 12.9% 15.4% 35.6% 41.1% -16% Early stage 4.1% 10.5% 34.6% 32.5% -61% Total in % 100.0% 100.0% 100.0% 100.0% Total in numbers (€ mil) 68,500 67,800 6,160 10,318 Investments by stage of financing Source: PEREP_Analytics; Europe = location of target

  12. Investments by Country of Management 7.8% 50.8% 6.5% 13.6% 1.5% 19.9%

  13. European Divestments by Segment Venture Buyouts # div # div € 1.4 bn € 6.2 bn 364 226 € 4.0 bn € 0.6 bn 496 278 € 0.5 bn € 3.7 bn 65 265 2007 Top Exit routes: Trade Sale Repayment of principal loans Source: PEREP_AnalyticsEurope = location of target Sale to another PE house

  14. 2007 2006 2007 2007 2007 2007 Am. N° Am. N° Am. N° Am. N° Am. N° Am. N° 10.7 17.3 10.7 18.7 18.4 21.6 9.1 7.0 24.8 13.7 3.4 4.9 5.6 19.0 8.8 24.0 14.6 24.5 3.8 5.9 13.3 15.1 5.1 7.9 12.1 11.4 13.8 8.7 17.4 12.8 11.0 8.0 8.2 9.0 12.2 6.5 13.5 7.7 15 9.7 6.2 5.0 14.9 14.2 10.9 8.8 17.3 14.8 10.0 6.7 - - 6.0 5.1 10.8 10.6 10.4 7.8 7.4 12.3 13.4 11.4 16.2 8.5 9.5 8.2 14.2 18.9 8.5 12.6 20.6 19.8 12.4 7.7 15.3 13.5 7.1 4.9 13.5 14.3 10.3 8.2 10.1 13.8 4.7 4.2 2.3 2.5 10.5 4.8 3.6 2.9 1.1 2.6 4.3 2.0 Main Sectors All Private Equity Investments VC inv. Buyout inv. VC div. Buyout div. In percentages Life sciences Computer and consumer electronics Communications Consumer goods and retail Consumer services: other Business and industrial products Business and industrial services Energy and environment Source: PEREP_AnalyticsEurope = location of target

  15. Conclusions • Despite record fundraising in 2006 and difficult market conditions in second half of 2007, appetite of investors towards the asset class remains undeterred as reflected by the 2007 fundraising figures; • What drives private equity deal making is mid-market buyouts by amount invested and expansion deals by number of investments; • Venture backed companies are exited mainly by trade sale, while buyout backed companies are sold mainly to other private equity firms. Main sectors divested are life sciences for venture-backed companies and business and industrial products for buyout backed companies in 2007. www.perepanalytics.eu

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