Nearly half of all private equity firms in the U.S. made money last year by exiting their investments through mergers and acquisitions, according to Swiss SCM Strategic Capital Management. The private equity advisory firm said 48% of exits involved M&A, as corporate buyout activity has heated up. In 2005, says SCM, private equity firms earned exit distributions of an estimated $54.6 billion, a 2% increased from the year before. The next most popular strategy for exiting p.e. firms is dividend recapitalization, which accounted for just 13% of the total. That percentage, according to Stefan Hepp, SCM’s CEO, is likely to drop as interest rates climb. The Swiss firm found that initial public offerings represented a scant 4% of private equity exiting activity. SCM did not detail what made up the remaining exiting percentages.
