The management buy-out (MBO) market in the UK has got off to a strong start according, to industry watcher KPMG.
Figures released by KPMG's Private Equity Group, which tracks UK buy-outs with a value of more than £10m, revealed the number of MBOs was up by 28 per cent in the first quarter of 2005 compared with Q1 2004.
In the past two months the industry has seen MBOs by distributor Hammer (CRN, 14 February), Stone Computers (CRN, 7 March) and ISG Webb (CRN, 28 March).
Michael Davies, a representative of KPMG's Private Equity Group, said: "The market is looking sustainable. MBOs have become an important financing option for many companies and it shows confidence in the private equity industry. A healthy MBO market is an asset."
Alan Norton, head of intelligence at credit reference firm Graydon, said: "People who have been in the industry for some time are either looking to get money out of the business and retire, or to invest it elsewhere. The existing management team decides it wants to continue to run the business and an MBO occurs. But a successful MBO depends on the skills of the management team and on whether it knows the company well enough."
James Ward, managing director of Hammer, agreed. "MBOs are good as long as it is the right team," he said. "An MBO is a more secure way of investing money. Investors are investing in people that have been in the business for a while, whereas in an independent investment they buy a business without knowing about it."
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