Mid-market private equity blooms

The post-recessionary period is being characterised by secondary and management buy-outs, according to new research.


The post-recessionary period is being characterised by secondary and management buy-outs, according to new research.

The post-recessionary period is being characterised by secondary and management buy-outs, according to new research.

The quarterly UK Growth Buy-out Dashboard, compiled by Lyceum Capital and Cass Business School, shows that the volume and value of deals completed during the first nine months of 2011 in the lower mid-market investment market has increased year-on-year for the previous three years.

New figures show that during 2011 63 transactions of between £10 million and £100 million were completed, bettering the figures of 50 from 2010 and 25 from 2009.

Andrew Aylwin, partner at Lyceum Capital, says that in the £10-100 million value bracket UK private equity volumes are continuing to improve.

He adds: ‘With 63 completed transactions so far, the market is trending back to historical norms of 100+ deals a year.

‘The lower mid-market segment remains a plentiful source of high quality opportunities across a range of sectors.’

While deal value during the third quarter of 2011 dropped from £794 million to £785 million, the figure exceeds the same period during 2010, which recorded a figure of £698 million.

The findings show that the majority of the 22 lower mid-market deals completed between 1 July and 30 September were in the £26-£50 million range, with 86 per cent under £50 million.

Management and secondary buy-outs remained the most active source of transaction type for private equity, with only two public-to-private delistings and no IPOs recorded during the third quarter of 2011.

Scott Moeller, a professor at Cass Business School, says that the findings are in direct contrast to the overall market when much larger deals of £100 million plus are considered.

Moeller adds: ‘That market has declined during the past two quarters and some reports show it declining dramatically in quarter three.

‘Therefore, the volume of deals in the lower mid market is encouraging in this difficult environment, and may prove in the next quarter to continue to be resilient.

The report points towards technology, media and communications (TMT) as the sector which continues to dominate the lower mid-market, with eight out of the 22 deals completed in the quarter involving TMT.

Todd Cardy

Todd Cardy

Todd was Editor of GrowthBusiness.co.uk between 2010 and 2011 as well as being responsible for publishing our digital and printed magazines focusing on private equity and venture capital. Connect with...

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