An Analysis of Private Equity Deal Performance through the Global Financial Crisis

While investors could see the impact of COVID-19 on the public markets in real-time, we are just now starting to see its impact percolate through the private markets. However, our first clear view of the effects likely won’t arrive until GPs begin to publish their 2Q valuations - but even then, the lasting impact will be uncertain.

To understand what that lasting impact might look like, I decided to look beyond the fund level and analyzed over 3,000 realized private equity deals from the Global Financial Crisis for clues.

Here are some of my findings:

In the six years preceding the 2008 crisis, the average size of buyout deals (Figure 1) grew each year, reaching $220 million in 2007. Since 2009, the average deal size of this data set has hovered around $140 million, suggesting that 2007 was certainly a peak year. If we overlay the calculated IRR for all deals in each vintage on total invested, it shows that in addition to being a record year for investment, 2007 was also the worst performing year.

In fact, 2006, 2007, and 2008 were the three worst vintages.

Although the IRR dipped significantly in 2007 (Figure 2), it was still 11.1%. However, the neutrally weighted IRR, where each deal is assumed to be the same size, was 18.0% suggesting that it was larger deals that dragged down the performance.

You can read the full analysis here on our website: