Buyout activity slumps in Q4

UK buyout volume and value has fallen dramatically since September making 2001 the first year since 1993 to see a drop in total value compared to previous years.

Buyout activity in the UK has slowed dramatically in the last quarter of the year, according to the Centre for Management Buyout Research [CMBR]. In its summary for 2001, the Centre reports that both volume and value have dropped since July but it's apparent the trend accelerated significantly after September 11, with deal-makers and their bankers preferring to wait and see rather than proceed.

Whilst the first six months of 2001 saw a record total value of activity (£12.9bn), deal flow slowed in the third quarter, and then plummeted in Q4, with just 79 deals completed to date with a total value of only £1.1billion.

The CMBR reports that total deal value for the year has dropped by £6bn – the first drop since 1993 – to just £17.9bn, compared to a year-end total of £23.9bn in 2000.

It is the large buyout transactions that have shown the most significant decline in the latter part of the year. Whilst the report confirms that mid-market activity has remained relatively stable, with 132 deals completed worth £2.3bn [170 deals worth £2.6bn in 2000], the larger £100m+ transactions have slowed dramatically in the second half of 2001.

There have only been a total of 34 such deals this year and only three of these since September, compared to a total of 45 completed in 2000. The largest transaction recorded was the acquisition by Apax Partners and Hicks, Muse, Tate & Furst of BT's directories business Yell for £2.14bn.

The report also reveals that the Hotels, Catering & Leisure sector saw the most transaction value with £5.1bn of deals [27 per cent of the total]. The Business Services sector was the most active and the second most valuable sector at £3.5bn.