Political uncertainty dampens Europe buy-and-build

Add-on acquisitions dropped almost 15% in the first half of the year, according to a report by Silverfleet Capital Partners.

Brexit uncertainty and its impact on UK companies led to a slowdown in European buy-and-build activity in the first half of this year.

A total of £4.1 billion ($5.3 billion; €4.7 billion) of add-on acquisitions across 287 deals were recorded during the period, compared with £4.8 billion across 327 deals in the first half of last year, according to Silverfleet Capital PartnersEuropean Buy & Build in H1 2018 report.

The primary reason cited for this was the lower than normal add-on activity in the UK, Ireland and Nordic region, which are usually the most active regions in Europe, the report noted.

The UK and Ireland, which represented the most active region in Europe in the first half, delivered much weaker performance compared with prior years. This was mainly driven by fewer UK companies pursuing add-ons in the UK.

Commenting on the report, Neil MacDougall, managing partner of Silverfleet Capital said: “Our view is that politics is at least part of the reason for this sea-change, no more so than in the UK and Ireland, with pre-Brexit caution the strongest explanation for the sharp drop in the number of domestic add-ons.”

The Nordic Region was also notably weaker, with 41 deals against 74 deals a year ago. Sweden accounted for nearly two-thirds of total Nordic activity with 26 add-ons.

France, Benelux and Italy similarly showed a dip in performance, while the DACH region has seen the highest number of add-ons in recent years.

There were only eight transactions with a deal size of over £60 million, versus 21 such deals in the first half of last year.