The UK private equity deal drought has not ended, but there are rays of light, according to quarterly research by corporate finance advisory boutique Corbett Keeling.

The UK private equity deal drought has not ended, but there are rays of light, according to quarterly research by corporate finance advisory boutique Corbett Keeling.

‘There are rumblings in the undergrowth and people are remaining positive,’ confirms Jim Keeling, joint chairman at Corbett Keeling.

Unsurprisingly, larger buy-outs (valued higher than €150 million) have suffered the most of late, with only two recorded in the second quarter of 2009 at an aggregate value of €900 million (£778.7 million).

Although this remains a small number, Keeling comments: ‘We’ve just been through a period where there were absolutely no deals of this size, so one or two is more positive than it seems.’

There has also been a small uptake in the amount of mid-sized deals (valued less than €150 million), with 14 reported in the second quarter compared with ten in the final quarter of 2008. Keeling adds: ‘Trade buyers are waking up, which is why we’re seeing more mid-sized deals.’

An accompanying survey, in which more than 500 private equity and venture capital executives were surveyed, reveals that despite relatively low figures, optimism is high. Over 70 per cent of respondents thought that activity levels in the lower mid-market will increase, and over 80 per cent thought that current portfolio restructurings are going to improve the long-term survival prospects of the businesses involved.

Keeling says: ‘Time marches on. The drivers behind dealmaking don’t stop. Pressure on financial institutions and [business] owners builds up, even if we are in a recession. There’s a healthy pipeline and people want to make deals.’