Buyout activity slumps in Q4

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.