2014 – Issue 2

Multiple: European private equity watch

Solid start, healthy outlook

Q1 2014

Return of the megadeal

Sell-side activity will continue to dominate

Non-European investors continue buying spree

Increasing popularity of IPOs as an exit route

Large deals in the pipeline

EY - Multiple: European private equity watch — Issue 2
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Activity in the European buyout market is holding up and the IPO exit route continues to prove attractive, with nine flotations out of the top 20 exits this quarter. So, is the private equity industry heading toward full recovery?

Headlines, Q1 2014

Deal activity holds up

  • A strong end to the quarter meant that Q1 closed with 143 deals completed. This compares with the 135 deals completed in the final quarter of 2013, and the 138 deals wrapped up in the first quarter of last year.

Secondaries suffer as UK IPO market remains strong

  • The popularity of the public markets as a preferred exit route continued in the first quarter of this year, with nine IPOs achieving a total value of €9b.

Return of the megadeal

  • This quarter has seen two €1b-plus buyouts: the €1.2b Unit4 deal in the Netherlands and Scout24, which achieved an enterprise value of €2b. Considering that there had not been a deal valued at €1b or more since Q3 of last year, it is encouraging that two completed this quarter.

UK assumes dominant market position

  • Of the quarter’s 143 deals, 48 came courtesy of the UK — more than double the contribution of France (23 deals), the next-best performer.

Trade sales rebound as Eurozone settles down

  • Trade sale values were strong, at €6.2b in the quarter. This is up substantially on the €4.5b recorded in the previous quarter. Foreign buyers see European assets as more attractive than they were during the depths of the Eurozone crisis, with 6 of the 10 largest trade sales involving overseas corporate buyers.

Lower mid-market struggles

  • Q1 2014 confirmed the slowdown in lower mid-market deals (€25 to €100m) seen in Q3 2013. In this range, only 17 deals equating to €896m were completed.

 European buyout — volume and value: at a glance