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Take-Privates On the Upswing in PE

By Armie Margaret Lee | Published on December 31, 2018

2018 saw companies including Envision Healthcare Corp.Blackhawk Network Holdings Inc. and Verifone Systems Inc. taken private. The coming year could see such transactions becoming more prominent in the deal landscape, according to PitchBook.

“We expect take-privates, including carveouts from public companies, to increase in prominence,” PitchBook said in its 2019 Private Equity Outlook released on Dec. 17.

Amid a growing number of megadeals and megafunds, the data provider noted that larger private equity funds “typically execute more sizable buyouts, and the proportion of take-privates rises in tandem with deal size.”

There are some caveats, however. If public equity valuations were to jump dramatically, many potential take-private targets could become too pricey for private equity firms to pursue, PitchBook said.

“Additionally, with the number of public companies in the U.S. halving in the past 15 years, many attractive targets have already been bought out,” it said.

This year through Dec. 20, there were 38 public-to-private buyout deals completed in the U.S. worth a combined $64.4 billion, compared with 50 deals valued at $61.2 billion for all of 2017.

Take-private activity this year includes KKR‘s purchase of healthcare services firm Envision Healthcare for about $5.5 billion in a deal completed in October, Silver Lake and P2 Capital Partners’ acquisition of payment card provider Blackhawk Network Holdings Inc. in a $3.5 billion deal completed in June and a Francisco Partners-led group’s purchase of payments company Verifone Systems Inc. for about $3.4 billion, including net debt, in a deal completed in August.

For its part, Apollo Global Management LLC (APO) bought hospital operator LifePoint Health Inc. in a deal that gave LifePoint an enterprise value of about $5.6 billion, and combined it with Apollo portfolio company RCCH HealthCare Partners. The merger closed in November.

Also, Apollo in August agreed to purchase Aspen Insurance Holdings Ltd. (AHL) in a deal valued at $2.6 billion.

On an earnings call in October, Apollo co-founder and senior managing director Josh Harris said the firm continues to “work through an active pipeline of potential investment opportunities that meet our value-oriented criteria, and our pipeline includes a number of other potential take-private deals.”

Take-private transactions this year also include the purchase of Advent International Corp.-backed payments accuracy technology company Cotiviti Holdings Inc. for $4.9 billion, including assumed debt, by Veritas Capital portfolio company Verscend Technologies Inc. in a deal completed in August. Veritas also purchased educational technology firm Cambium Learning Group Inc. for about $685 million in a transaction completed in December.

In another take-private deal, Veritas teamed up with Elliott Management Corp.‘s private equity unit, Evergreen Coast Capital, to buy healthcare technology firm athenahealth Inc.(ATHN) for about $5.7 billion. The transaction, announced in November, is expected to be completed in the first half of 2019. The acquirers plan to combine athenahealth with Veritas portfolio company Virence Health.

–Steve Gelsi, Chris Nolter, Michael Brown, Ron Orol and Alexandra Garfinkle contributed to this report


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