Private equity firms returned to dealmaking in their droves last year, with the value of backed buy-outs in Europe almost tripling to €49 billion (£40.9 billion) from €18.3 billion in 2009, research shows.
Private equity firms returned to dealmaking in their droves last year, with the value of backed buy-outs in Europe almost tripling to €49 billion (£40.9 billion) from €18.3 billion in 2009, research shows.
European buy-outs rose by 17 per cent in volume from 433 to 505, according to a report from the Centre for Management Buy-out Research at Nottingham University.
The exit market also rebounded strongly with the overall value of businesses sold by private equity totalling €55.7 billion last year, up from €9.3 billion. It was the first time the value of exits outstripped investment (€49 billion).
The IPO market showed the biggest recovery of all exit routes, with 14 recorded across Europe in 2010 compared with only one in 2009, the report says.
The UK continues to be the largest buy-out market in Europe, with 43 per cent (€21 billion). France and Germany follow at 15 per cent (€7.2 billion) and 9 per cent (€4.5 billion) respectively.
In financing buy-outs, debt remains a less favoured option, the report says. Senior debt accounted for most at 31 per cent, which is steady on 2009, however, much lower than the high of 51 per cent in 2006.
Christiian Marriott, director at Barclays Private Equity, which co-sponsored the research, says the increase deal volume, particularly in exits, suggests the start of a sustained recovery.
He adds: ‘We have seen very encouraging signs from the exit market in 2010 with the total value of exits outstripping total entry values for the first time ever and indicating a renewed appetite for private equity-backed assets in the public and private markets.’
According to the report, the fourth quarter saw a flurry of activity with €16 billion worth of deals completed, the highest quarterly value since the collapse of Lehman Brothers in 2008. For the year, the average deal size more than doubled reaching €97 million, however, the level remains markedly down on the 2006 peak of €175 million.
Manufacturing leads the recovery, recording 141 transactions last year to total 28 per cent of all European deals by volume.
There was also an increase in the number of deals valued at €500 million or more. Last year saw 25 larger deals made, up from five in 2009, with nine transactions completed in the UK alone. Half of all European buy-outs were valued under €10 million.
However, deal volumes and values are still far below their 2007 peak, when almost 1,000 buy-outs were completed in Europe for a combined value of approximately €170 billion.
