Management buy-outs (MBOs) were the most prevalent private equity transaction in the first quarter of this year, while the number of secondary buy-outs is on the rise, finds research.

Management buy-outs (MBOs) were the most prevalent private equity transaction in the first quarter of this year, while the number of secondary buy-outs is on the rise, finds research.
 
Data from Lyceum Capital and Cass Business School’s UK Growth Buy-out Dashboard shows that there were 23 smaller private equity buy-outs worth a total of £828 million in the first quarter of 2011 – the largest figure for any quarter in the past two years.
 
Of those, 14 were MBOs, although the research finds that there were also eight secondary buy-outs (SBO), where a financial or private equity firm sells its investment in a company to another firm, completed in the same period. This was also the highest number of SBOs recorded in any quarter since 2009.
 
Only one public-to-private transaction was achieved in the quarter, which the report notes as ’underlining the lack of appetite for de-listings within the mid-market’.
 
Technology, media and telecommunications businesses attracted the most private equity investment in the period, with the seven deals completed in the sector accounting for 30 per cent of all transactions, the report finds. This is a sharp rise in activity from previous quarters – where there were three deals in the sector in the final quarter, and two in the third quarter of 2010.
 
The number of exits from private equity investments remained relatively steady in the first quarter of 2011, with 11 deals completed, compared with an average of 10 during the previous four quarters.
 
Scott Moeller, professor in the practice of finance at Cass Business School, comments, ‘It is notable that the first quarter’s activity in this lower middle market has been broader based than last year in terms of both industry sectors and size of deal.