Advisor: Large firms invading mid-market

Research shows that activity levels of large-cap private equity groups in the European mid-market have increased 72% compared to the three years leading up to the financial crisis.

Large-cap private equity investment in the European mid-market has increased 72 percent in the last three years, compared to the three years leading up to the economic downturn, according to research by DC Advisory Partners.

The average percentage of primary transactions closed by large-cap firms that were below £500 million (€588 million; $802 million) in the three years prior to the credit crunch was 29 percent. Since 2008, that figure has risen to 50 percent, a percentage difference of 72 percent.

“[L]arge-cap private equity groups are increasingly focused on the mid-market for primary acquisitions,” Simon Tilly, head of DC Advisory Partners’ financial sponsors coverage group, said in a statement. “The mid-market is where deal flow continues to be, and these private equity groups have been attracted by well-priced, high-quality assets with a strong track record through the recession where they see an excellent opportunity to generate significant growth over the medium term,” he said.

The study looked at 423 mid-market acquisitions made by 16 large-cap private equity firms from 2005 to 2010. Of the 423 deals, 60 percent were add-on acquisitions, with the remaining 40 percent being primary transactions.

DC Advisory Partners, which changed its name from Close Brothers Corporate Finance in May, is headed by Stephen Aulsebrook, who has been with the firm since 1996. His private equity clients have included Permira, Warburg Pincus, Cinven and The Blackstone Group. He was formerly president of merchant bank Hill Samuel in New York.

Close Brothers was a prominent name in the European private equity mid-market, with recent mandates including advising Warburg Pincus on its acquisition of Survitec for £280 million from Montagu Private Equity.