Continental Europe surpasses UK for large deals

Continental Europe is seeing a consistently strong flow of large buyouts, according to new figures from the UK’s Centre for Management Buyout Research (CMBOR).

Preliminary figures from CMBOR show private equity deal value in continental Europe increasing relative to the UK. 

The UK and continental Europe had been evenly matched in terms of deal value for a number of years, but the figures show that for the last two years total deal value on the Continent has been 60 percent higher than in the UK. In 2003, Continental deal value was €38 billion compared with €23 billion in the UK, while the previous year the respective totals were €44 billion and €25 billion.

“After years of well matched performance, clear water now separates deal values in the UK and the Continent,” said Graeme White, head of Barclays Private Equity. “Whether this is a maintainable lead is less clear, not least because Continental growth is driven by a few very large deals.”

This trend toward a predominance of mega-deals was most clearly highlighted in Italy in 2003. The country enjoyed its strongest year on year growth ever: more than doubling the total value of deals from €3.5 billion to €7.8 billion. But the vast majority of this increase was accounted for by just one deal: the €3.1 billion buyout of SEAT Pagine Gialle from Telecom Italia, which was the largest European buyout of the year.

The commonly expressed concern that Germany is failing to live up to deal flow expectations would now only appear applicable to the mid-market. The country was the most valuable Continental buyout market in 2003, with €10.4 billion worth of deals marking a significant increase on the €7.9 billion total posted the previous year.

The findings concluded that large deals (defined as more than €250 million) are driving the European market, with 43 completed in 2003 compared with 34 in 2002 and 26 in 2001. But the UK bucks the trend, having seen a decrease of large deals to 14 in 2003, compared with 15 the previous year and 25 in 2001.

In terms of volume of deals, the UK still outperforms continental Europe (665 deals completed in 2003 compared with Europe’s 526). The number of deals in France in 2003 stayed exactly the same as the previous year at 122, while Germany saw a slight fall from 102 to 100.

Only four of the 14 countries measured by the CMBOR report witnessed an increase in the volume of deals completed compared with the previous year: Italy, the Netherlands, Norway and Spain.