The number and value of management buy-outs in the West Midlands
in the first half of 2011, was double that recorded in the second
half of 2010, according to figures released today by the Centre of
Management Buy-Out Research (CMBOR), sponsored by Barclays Private
Equity and Ernst and Young.
Eight deals with a total value of £764m were recorded in
the first half of the year compared with four deals valued at
£383m in the second half of 2010. Nationally, there were 81
deals with a total value of £5.7bn compared to 78 deals with
a value of £10,1bn in the second half of 2010.
The headline figures demonstrate the relative strength of the
West Midlands vs. the national average, although the figures were
influenced by the significant secondary buyout of Phones4U by BC
Partners in March.
Nationally, the three months to June were less active than the
start of the year, with 59 buy-outs recorded with a total value of
£2.3bn, compared to 106 deals with a total value of
£3.6bn in the first quarter of the year.
For the first time since 2006, nationally private equity exits
have outstripped investments. At £5.8bn, the total
value of exits completed during the period has exceeded the total
value of investments of £5.7bn.
Paul Harper, investment director at the Birmingham Office of
Barclays Private Equity, said that although the West Midlands had
had an encouraging start, the lack of mid-market deal flow in the
region put a question-mark over whether this would continue into
the second half of the year.
"Overall, the UK private equity market has had a slow start to
2011 following a heightened level of buy-out activity at the end of
2010. Buy-out firms in general have been more inclined to
sell than to acquire and overall, it is the exit market that has
dominated UK deal flow in the first half of this year.
"While there are a few large buy-outs in the pipeline the
overall reckoning is that the second half of the year will be
subdued. If that is the case, the UK buy-out market will be
operating at a level last seen in the late 1990s. The flip
side of the coin though is that there is capital waiting to be
invested so whilst the buy-out market has already exceeded 2009's
full year activity, the industry remains cautious particularly
around asset pricing in the face of competition from private equity
houses and an emerging stream of trade buyers."
The CMBOR figures reveal that the number of large buy-outs (over
£500m) more than doubled in 2010 (vs. 2009) but so far this
year, there have been only three deals in that sector. Deal
flow in the mid-market (£100m to £500m) in particular
has slowed this year, recording only seven deals totalling
£1.7bn despite leading market activity in 2010 (33 deals
totalling £7.4bn). The upper mid-market (£250m to
£500m) has seen very little activity in the first half of
2011, with just two deals completed totalling £836m compared
to £1.9bn in the second half of 2010.
There were no PE-backed deals recorded in the East Midlands in
the first half, with just one transaction recorded at a value of
£2m compared with four deals valued at a total of £44m
in the second half of 2010.