Manufacturing
Manufacturing has traditionally been the most active sector for buyout activity, and this remains true so far in 2012. However, it is interesting to note that although, as a proportion, the number of manufacturing deals is holding up, the values are falling. In 2011, the average manufacturing deal was valued at €74m; so far this year that figure stands at €43m. There would appear to be a link here with the general slowdown in deals completed in Germany.
Technology, Media and Telecommunications (TMT)
Although far fewer in number, the technology, media and telecommunications (TMT) sector has the largest aggregate value — 36 deals with a combined value of more than €5.3b during the first six months of 2012.
In particular, we are seeing newly formed interest in technology software from PE and a continued interest in mobile telecoms. This started three years ago with Sunrise and has continued with Orange Communications. The bulk of the €5b total value is made up of three deals: Orange Communications, Misys and Turaz/Kondor, with a combined value of €3.7b.
Financial Services
The Financial Services (FS) sector has been surprisingly inactive. It registered 10 deals valued at €593m in the first half of this year, compared with 28 deals worth €4.1b in 2011. Whether regulatory changes will drive further disposals in the future remains to be seen. At just €0.6b, deal values in the FS sector are at their lowest point since 2003. We know there are a number of FS deals being talked about, driven by the precarious position of European financial institutions and changing regulations, and it is just a matter of time before we see these come to market.
Retail
In times of economic downturn, retail is typically the first sector to be hit by a number of insolvencies. PE is taking advantage of the opportunity to buy distressed retail businesses with a view to turning them back into healthy businesses. This is evidenced by Sun European Partners’ acquisition of Bonmarche, part of the Peacocks chain that went into administration. However, the price paid for assets in these situations is much lower than it would be during more stable economic times.
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