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SCM annual exit analysis - 2005

The year 2005 saw a continuation of the high level of exit activity from the previous year, finds SCM. European distributions reached €14.5bn, a 32 per cent increase compared to the year 2004. In the US, distributions amounted to €54.6 bn indicating a stagnation on a high level as the year-on-year increase amounted to only two per cent. Overall, global private equity distributions increased by eight per cent year on year.

The trend towards larger exits is still persisting: SCM data shows that while the number of exits increased moderately (+15%), the exit value increased substantially (+66%). Given that in 2004 the volume of exits has already increased by +115% the survey thus confirms a trend towards larger exits.

Tradesales remain the most important exit route: Globally, tradesales remain the most important exit route with 36% of the total exit amount recorded in our survey. Recaps are coming second place with 25% of all exit amounts and showed the strongest y-t-y increase with a growth of volume by 177%.

Smaller role for secondary sales: Secondary sales (and in some cases tertiary sales to other Private Equity firms) play a smaller role for all Private Equity funds surveyed as an exit route with a 16% share in the volume of exits and write-offs have declined by 62% in volume and account only for 1% of total exit amounts.

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SCM Strategic Capital Management AG was established in 1996 as one of the first European advisors/gatekeepers focused on institutional private equity and – since 2003 – on international real estate portfolios. Services include investment strategy, asset allocation, screening and due diligence of private equity and real estate funds as well as investment monitoring/controlling and reporting. The firm provides discretionary and non-discretionary advisory services to a number of large pension funds and insurance companies throughout Europe that are seeking a partner that provides them with independent advice tailored to each client.