Mega-deals boost UK buyout market

2004 saw the second highest level of buyout activity recorded in the UK with a total value of £20.1bn, according to a report from CMBOR.

Statistics published by the Centre for Management Buyout Research reveal that the total value of the UK buyout market in 2004 rose to £20.1 billion (€29.3 billion; $38.6 billion), the second highest annual value total recorded.

The figure represents a 20 percent increase on the £16.3 billion total recorded in 2003 and is second only to the £23.9 billion peak of 2000. The volume of buyouts fell 6 percent from 698 deals in 2003 to 655 deals.

The total was boosted by a new record in so-called “mega buyouts” – deals with a value of more than £100 million – of which there were 47 in total, accounting for a total of £14.8 billion.

The 47 £100m+ buyouts ranged from the £101 million acquisition of fashion shoe retailer Jimmy Choo by Hicks Muse (Europe) to the £1.75 billion acquisition of the AA Group by CVC Capital Partners and Permira.

Perhaps unsurprisingly, given the levels of leverage available in the marketplace, CMBOR’s figures also showed a record figure for the average amount of debt employed in buyouts, with debt averaging over 51 percent of deal structures.

The figures also point to a record year for private equity exits, both in terms of number and value. 310 exit events took place in 2004, with a total value of £18.1 billion.

Secondary buyouts increased by 25 percent on 2003 levels, but most pertinently, trade sales increased by 70 percent from 67 in 2003 to 116 in 2004. IPOs of former buyouts tripled from ten in 2003 to 30 last year.