Global PE continues boom, with highest Q3 on record

After four quarters in a row of exceptionally high PE activity, Q3 2021 has continued the trend, recording the highest value and volume of any third quarter on record

The summer months of July and August typically mean fewer dealmakers at work, and lackluster numbers for PE activity. But even through the summer, the PE industry has continued its remarkable run in Q3, following four straight quarters of exceptionally strong deal activity.

A total of 1,928 PE-related transactions were announced through Q3, worth US$496.2 billion. While this was a 17% dip in both value and volume compared to the previous quarter, it represents the third highest quarter of any year on Mergermarket record (since 2006)—after the previous two quarters.

Overall, 2021 is already a record-breaking year for private equity activity. The first three quarters saw the announcement of 6,368 deals worth US$1.6 trillion in total, already more than in any full-year period on Mergermarket record. Similarly, the number of deals within this period is more than the 5,695 deals announced in 2018, the previous annual record.

Buyouts shine 

PE activity across all deal types—primary buyouts, secondary buyouts and exits—are elevated, but primary buyouts show the biggest year-on-year jump in activity, demonstrating the firepower at PE houses’ disposal.

Primary buyouts totaled US$300.9 billion in value in the third quarter—representing a more than threefold increase from the US$95.9 billion in deal activity in the same quarter last year. Volume jumped up by 38% to 1,129 transactions over the same period.

Across the year so far, there were 3,818 primary buyouts in the first three quarters, worth US$959.9 billion in total value. This is by far the highest total for both volume and value in any Q1-Q3 period in Mergermarket history and already nearly double the US$446 billion in total value across all of last year.

This rise in buyouts was doubtlessly fueled by the high levels of dry powder (as high as US$2 trillion by some estimates) and low interest financing available to PE houses. But the recent boom in SPAC activity has also pushed up activity.

The largest PE-related transaction of the third quarter saw Gores Guggenheim, a SPAC sponsored by PE firm Gores Group and investment and advisory firm Guggenheim Partners, announce its intention to combine with Polestar, an electric vehicle (EV) company owned by automakers Volvo and Geely. The proposed transaction gives the company an approximate enterprise value of US$20 billion.

The second-largest buyout was a more typical one—and is a further demonstration of the strength of buyout firms. The US$14 billion acquisition of UK supermarket chain Morrisons saw Clayton, Dubilier & Rice (CDR), a US-based PE firm, win out in a bidder war against a consortium led by SoftBank-backed Fortress Investment. Initially, CDR’s first bid for Morrisons was valued at US$12.2 billion—an EV/EBITDA multiple of 12.3x. The final bid represents a 14.2x multiple—an example of rising valuation multiples in attractive sectors.

Secondary and exit activity high by historical standards 

By most standards, secondary buyouts and exits to trade buyers have shown spectacular results this year—the 738 secondaries in the first three quarters came to US$224.2 billion. Like overall activity, this total value is more than any full-year period on record, overtaking the previous high of US$185.1 billion across 2017. Similarly, exit activity totaled US$442.2 billion across the first three quarters of the year—again more than any total year value on Mergermarket record.

TMT stays on top, despite QoQ dip 

Technology, media, and telecom (TMT) continued to register the strongest level of activity of any sector, by both value and volume.

TMT posted the highest value of PE activity of any sector in Q3, with a total of US$175.4 billion. While this was a 13% drop on the previous quarter, although that only goes to show how strong PE activity has been in the sector in the past year. Prior to Q3 2020, the last time total PE value in the sector topped US$100 billion was in Q2 2007, which recorded deal activity worth US$120 billion. Every quarter since the third quarter last year, however, has topped US$100 billion—with the previous quarter totaling US$201.3 billion.

The largest transaction in the sector was a telecoms deal, Lumen’s agreement to sell assets in 20 US states to Apollo for US$7.5 billion. The deal will see Apollo take over fiber and copper networks mainly in the Midwest and Southeast and follows on from a spate of recent deals in the telco space undertaken by Apollo, including a US$200 million investment in Utah-based carrier FirstDigital and the acquisition of telecoms platform Parallel Infrastructures from Lendlease for an undisclosed sum.


Even before the fourth quarter began, 2021 has already set records for private equity activity. Yet the conditions for strong deal activity are set to remain in place for the rest of this year and into the next. PE firms continue to close new funds and although interest rates are expected to rise in 2022, financing conditions are set to remain benign by historical standards. Upcoming changes to the tax regime in the US may spur further activity as firms look to finalize deals before the rules change.

The COVID-19 pandemic’s effect on the economy—including disruptions to supply chains globally—has revealed new investment opportunities, as well as accelerated the need for existing ones, like digitalization and the energy transition. With its investment expertise and available capital, the PE industry is well-positioned to take advantage.

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