UK still in front for management buyouts despite decline
Overall value of acquisitions in Europe declines quarter on quarter
Although the overall value of management buyouts across Europe in Q1 of 2013 fell 17 per cent from Q4 2012 and 21 per cent from Q1 2012 to €11.1bn (£9.38bn), the UK still leads the market, says an Ernst & Young/Equistone Partners-sponsored report.
The report adds that, with €3.8bn (£3.2bn) from a total of 33 deals in the three months ending 27 March 2013, the UK continues to lead the European market in terms of value - although it had almost been matched by France in deal numbers.
"Despite a flurry of activity that saw 47 deals close in Q4 2012, UK deal activity is now at its lowest point since Q4 2009 and has fallen by over 50 per cent from the record high of 68 deals in Q1 2012," it said.
The study, published by Imperial College's Centre for Management Buyout Research, also found that private equity and IPOs were bouncing back, with deals in retail taking the lead from buyouts in the manufacturing sector for the first time - but only in value terms - as distressed retailers sought further funding or to exit the market.
Manufacturing still led in terms of number of deals, with 35 buyouts (worth a total €2.4bn) seen in Europe in Q1, compared to 53 a year ago. Sales of business services organisations came in third place in Q1 of 2013, representing 15 buyouts or €1.2bn.
Continuing lack of confidence in the second half of 2012 made for lower deal numbers. However, the top 10 buyouts in Q1 saw a "healthy split" across IPOs, trade sales and secondary buyouts, according to a statement from Ernst & Young's private equity department.
"It is positive to see corporates still finding good, strategic businesses to acquire, and the second largest exit so far this quarter was One GmbH/Orange Austria Telecommunications' trade sale for €1.3bn to Hutchinson 3G," it said.
The study defined buyouts as deals where more than 50 per cent of shares changed ownership with management, private equity, or both having a controlling stake on completion. Equity funding had to be primarily from private equity funds and the bought-out company must have its own financing structure.