European buyout market remains resilient in Q2
French, German and Spanish activity leads Continental Europe market

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London 7 July 2011: The overall value of all European buyouts remained resilient in the second quarter of 2011 at €12.6b according to the latest data published by the Centre for Management Buyout Research (CMBOR), sponsored by EY and Barclays Private Equity.

The 2011 European private equity buyout market is on course to match 2010 deal activity of €54.6b with €25.9b of deals recorded so far this year.

Highlights:

  • The European private equity-backed buyout market slowed by 8% in Q2 2011, reaching a total value of €12.6b compared to €13.3b in Q1 2011, and the €20.4b recorded in Q4 2010. However, there has been a 13% increase in value this quarter (Q2 2011) compared to the same quarter in 2010 €11.1b
  • In H1 2011 €20.8b in exit value has been recorded with up to €30b of announced exits still pending.
  • Although activity is down compared to 2010 it has already exceed that of the whole of 2009 of €18.3b.
  • The quarter saw the highest deal of the year so far – the €1.4b sale of the Swedish lifestyle company Dometic.
  • Average deal value was €95m last year and is €94m in 2011 so far
  • Public to private deals particularly suffered in the quarter with only one deal worth €38m. This compares to three deals worth €1.6b in Q1 2011 and six deals worth €2.2b in Q2 2010.
  • By contrast the value of secondary buy-outs rose by 14% in Q2 2011 to €7b.
  • The private equity buyout markets in Spain, France and Germany lead the continental European buyout market by value and volume in Q2 2011. Germany completed 37 deals with a value of €4b and France completed 60 deals with a value of €3.9b. Spain’s 16 deals, valued at €3.4b, in the first half of 2011 is particularly impressive given its macroeconomic backdrop of sovereign debt fears.

European market trends
French market shows strong gains, as Germany holds steady

  • Germany fell to below a tenth of its 2007 record value (€26.9b) with just €1.9b recorded in 2009, however, it reached €5.7b in 2010 and already has €3.9b this year.
  • Total deal value in France saw a dramatic increase from the €1.9b seen in the whole of 2009 to €3.9b already confirmed so far in 2011, with €2.5b in Q2 alone.
  • Other European markets that had a strong Q2 and look likely to exceed their value for 2010 are Netherlands, Spain and Sweden.
  • Last year the UK remained by far the largest country by volume with 181 buy-outs. In H1 2011 the UK has 81 deals.


Deal source

  • Secondary buy outs held firm with deal value held up with €13b recorded in 2011 so far, compared to €26b for the whole of 2010.
  • Family & private (33%) continue to make up a large proportion of deal source for the first half of 2011, compared to the whole of 2010 (35%).


Sectors

  • The financial services (€2.2b) and healthcare and leisure (€3.1b) sectors look set to be on course to beat the 2010 totals. However, paper, print and publishing, TMT and Transport are down heavily on the previous year. While the number of retail buy-outs is down significantly (43 to 16) on 2010, the overall deal value (€3.5b) remains strong compared to the 2010 total (€4.9b).

Sachin Date, EMEIA Private Equity Leader at EY, commented:
"Despite the uncertain economic outlook across Europe and fears of an escalating sovereign debt crisis, we have seen a good pace of buy-out activity in the first half of 2011. In particular, Germany, France and Spain have shown strength so far in 2011, dominating the buy-out scene in continental Europe.

"The exit market has been fairly resilient recording its highest quarterly activity since 2008. With approximately €30b of exits in the pipeline, we expect a good amount of exit activity throughout the remainder of the year. However in contrast to 2010, there have been no IPOs of significance as yet, reflecting the uncertainty in the capital markets."

Christiian Marriott, Director at Barclays Private Equity commented:
“For many years, the UK private equity market dominated European deal activity but so far in 2011 there has been a fairly even spread of deal activity between the UK, France and Germany. With overall volumes in each country recovering at different speeds post the economic crisis, it is clear that investors will need to adapt their strategy to each market.” 

Note: The 15 countries included in the research are: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerlandand the UK.