European buyout activity sees major decline

The CMBOR report highlights the first fall in buyout activity in the UK and Europe since 1993.

The Centre for Management Buyout Research (CMBOR) has published its report on buyout activity in 2001 which shows a major fall in activity, particularly in the second half of the year.

The report, published in conjunction with Deloitte & Touche and Barclays Private Equity, highlights a 20 per cent fall in the total value of UK activity with continental Europe faring slightly better with a 13 per cent decline.

The 2001 review reports total deal value for continental Europe of E31.6bn, the lowest level for two years. The record 2000 figure was E36.2bn. The total value of deals in the UK fell to E31.1bn. However, the fall in value was not reflected in a drop in deal volume, with the UK reporting a 3.3 per cent increase in the number of buyouts in 2001.

At country level, there was large disparity in performances. Germany saw its deal value more than halve, from E15.1bn to E7bn, although the volume of German deals rose by nearly 40 per cent. Conversely, the Netherlands' market value more than doubled in value to E4.4bn (2000: E1.8bn) despite deal numbers falling by 28 per cent. 

The general trend of UK buyout activity matching continental European activity remained fairly applicable, with the UK contributing around half of the total value of E62.6bn.

The year was typified by a trend which saw buyout activity remain fairly buoyant until the third quarter of 2001, after which the market all but disappeared. The total deal value recorded for the second half of the year was less than half of that recorded in the first half.

Chris Ward, head of private equity at Deloitte & Touche said he expected 2002 to be stronger than last year, despite lower levels of activity seen in the first quarter of 2002. 'With the record amount of new funds raised by UK private equity firms in 2001 earmarked for MBO deals over £100m, we expect a relatively buoyant 2002, particularly in manufacturing industries as European groups get to grips with rationalising their activities.'