Big deals buoy European buyout market

The biggest five private equity deals in Europe had a combined value of €10 billion in Q3 – more than half the total for the region.

The European private equity buyout market saw a surge in deal values in the three months to September, according to the Centre for Management Buyout Research: 119 deals were completed with a combined value of €19.7 billion. That’s the highest quarterly total since the fourth quarter of 2010, and more than double the €8.6 billion figure recorded in the second quarter of this year.

However, the total number of deals in Q3 was actually down by 8 percent quarter-on-quarter – from 130 to 119. The lower mid-market (€25 million to €100 million) saw a particular slowdown: only 26 deals were completed with a total value of €1.4 billion, compared with 24 deals worth €2.4 billion in the previous quarter.

More than half the overall total came courtesy of the biggest five deals, which had a combined value of €10 billion – more than all deals in the previous quarter combined. All five were valued at over €1 billion: Springer Science & Business Media was the largest at €3.3 billion, followed by Ista (€3.1 billion), CeramTec (€1.5 billion), Vue Entertainment (€1.1 billion) and Befessa (€1.1 billion).

There were also some other positive signs in the data. Realisation activity seems to be improving: there have been 276 exits this year, with a combined value of more than €51 billion – that compares to 264 exits at €45 billion over the same period in 2012. And there has been over €31 billion generated in refinancing proceeds – compared with €13.4 billion in the same period last year. Debt availability continues to be robust, at least for larger (€100 million-plus) deals: the proportion of debt is up to the highest level recorded since 2007.

Germany has taken over from the UK as the most active country: combined deal value in the quarter was €9 billion, the highest quarterly total since Q1 2007. The UK lagged well behind, with total deal value of €5.1 billion – although that compares favourably with the €3.1 billion it delivered the previous quarter.