PRINT THIS PAGE UK management buy-outs Autumn Review 2002
04/12/2002. Source:CMBOR.
After a slow start to 2002 with just £7.2bn recorded in the first half of the year, the third quarter has seen greater confidence in the UK buy-out market with a total of £5.5bn of buy-outs completed. Although this shows an uptick in the amount of capital invested, dealflow remained consistent with the previous two quarters with 145 deals made compared to 157 in Q2 and 140 in Q3, according to CMBOR.
- Buy-out market value picks up in third quarter of 2002
The total value of the UK buy-out market for the first nine months of 2002 stands at £12.7 million after just £7.2 billion had been recorded in the first half of the year.
The £5.5 billion recorded in the third quarter is the highest quarterly total since quarter two of 2001 and is well above the £3.7 billion registered in the second quarter of this year.
- Buy-out market value props up UK M&A value in 2002
Buy-outs have provided almost half of all UK M&A value in the first half of the current year, demonstrating the relative robustness of buy-out activity at a time of slowdown in the corporate sector.
- Buy-out volume however remains below recent levels
The total volume of buy-outs/buy-ins for the first nine months stands at 442, after 629 deals were recorded for the whole of last year.
The third quarter saw 145 completions, which is well below the 157 of quarter two but slightly above the first quarter figure of 140.
- Average buy-out value remains at lowest level since 1999
In 2001 average deal size fell to £30.9 million and has fallen further this year to £28.8 million.
- Management Buy-in value recovers after a poor start to the year
With MBI value currently at £9.2 billion, management buy-ins have provided over 70 percent of total market value in the first nine months.
- Volume falls despite continued value growth in third quarter
Buy-out value in the third quarter was over 50 percent higher than the previous quarter reaching £5.5 billion.
- Slower mega deal activity continues to hold back market value
Large buy-out activity continues to be slower than in recent years, although there were signs of renewed activity, with eight £100 million plus deals in the third quarter.
The largest deal recorded to date in 2002 remains the £2.0 billion secondary buy-out of the Unique and Voyager Pub businesses in March.
- Lower value buy-outs stay relatively strong but mid-market is flat
There is some sign of recovery at the lower end to balance the decrease at the top end of the buy-out market.
The first nine months saw 334 buy-outs below £10 million compared to 459 for the whole of 2001.
- Buy-out activity fairly evenly spread throughout the UK regions in 2002
London continues to be the most active region, with 54 buy-outs, although this figure is well down on the 2001 full year total of 94.
There has been a generally wide spread of activity between many of the other regions, although completions in the South East region remain relatively slow at 45 after 95 for the whole of 2001.
- Hotels, Catering & Leisure is still largest sector by value
At £5.4 billion the Hotels, Catering & Leisure sector was clearly the most valuable in 2001.
- Divestment remains the largest source with private buy-outs continuing to fall
Despite falling to 30.9 percent in the first nine months of 2002, following 41.9 percent in 2000 and 36.7 percent in 2001, local parent divestment has remained the most common source of buy-outs.
- Public to Private market fares slightly better in the third quarter
The public to private market has remained relatively weak with just 13 buy-outs in the first nine months, after a total of 33 deals last year.
The total value of public to private buy-outs so far in 2002 is just £1.6 billion compared to £4.9 billion for 2001.
- Exits remain difficult in 2002
A total of 183 exits have been recorded in the first nine months of 2002, compared to 243 for the whole of 2001.
Trade sales remain a problem with just 54 completed to date, compared to 92 in 2001.
Receiverships have again contributed heavily to the figures with 77 in the first 9 months, with the annual figure now looking as if it could match the 2001 total of 108.
- Outlook for remainder of 2002 and beyond still unclear
The value of buy-outs has picked up in the third quarter, with the number of larger deals increasing.
However the market still has some way to go if it is to match the total value figure achieved last year.
With substantial buy-out funds available the future buy-out market direction is dependent on participants' views as on the strength and direction of both the UK and world economies in the coming years.
Copyright © 2002 CMBOR
The Centre for Management Buy-out Research is sponsored by Barclays Private Equity and Deloitte & Touche at the Nottingham University Business School. The Centre for Management Buy-out Research (CMBOR) was founded by Barclays Private Equity Limited and Deloitte & Touche at Nottingham University Business School in March 1986 to monitor and analyse management buy-outs in a comprehensive and objective way. As an independent body, CMBOR has developed a wide-ranging and detailed database of over 17,000 companies, which provides the only complete set of statistics on management buy-outs and buy-ins in Europe. CMBOR publishes regular reports on buy-out trends and relevant issues in its UK Quarterly Review and annual European Management Buy-out Review. Centre for Management Buy-out Research (CMBOR), Nottingham University Business School, Jubilee Campus, Wollaton Road, Nottingham, NG8 1BB, 44 115 951, Andrew.Burrows@nottingham.ac.uk, www.cmbor.org
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