Q3 2020 Private Equity Industry Trends

Q3 2020 Key Highlights

Regarding the Software horizontal, the largest sponsored transaction in Q3 2020 was Clayton, Dubilier & Rice’s announced acquisition of Epicor Software Corporation, which provides industry specific enterprise software to industrial-focused sectors, for $4.7 billion.

In terms of the Education vertical, the largest sponsored transaction in Q3 2020 was Veritas Capital backed Cambium Learning Group’s announced acquisition of Rosetta Stone, a technology-based learning solutions company best known for its language programs, for $735 million.

Q3 2020 Key Trends

Total transaction volume in Q3 2020 increased by 50 percent over Q2 2020, from 158 to 237.

Total transaction value in Q3 2020 nearly quadrupled over Q2 2020, from $6.5 billion to $25.6 billion.

Multiples & Value Trends

The median revenue multiple from 2019 through the 1st 3 Quarters of 2020 declined 11 percent, from 3.5x to 3.1x.

The median EBITDA multiple from 2019 through the 1st 3 Quarters of 2020 improved 13 percent, from 14.1x to 16.0x.

Disclosed median enterprise value multiples from 2017 through the 1st 3 Quarters of 2020 were 3.0x revenue and 14.4x EBITDA.

Top Ten Deals Through Q3 2020

The top ten deals by value have seen five new additions since our half year report. This included two of the top three largest transactions year-to-date. None of the top ten acquisitions throughout the 1st 3 Quarters of 2020 occurred during Q2.

These five transactions, with an aggregate value of $14.8 billion, represented 29 percent of transaction value in the 1st 3 Quarters of 2020 and 58 percent of Q3 2020 transaction value.