Pub deal leads UK buyout recovery

Buyout transactions totalled £3.65bn in Q1 2002, according to a new report from the Centre for Management Buyout Research.

The value of buyouts deals for the first quarter of 2002 is up nearly £2bn on the final quarter for 2001, according to figures published by the Centre for Management Buyout Research (CMBOR).

Total deal value for Q1 stands at £3.65bn, with the bulk of this total coming from the largest deal, the £2bn acquisition of the Unique and Voyager pub chains. The average deal size is considerably lower though, with the second-largest deal, the £202 million IBO of Dignity Caring Funeral Services, a tenth of the size.

The findings follow the depressed second half performance of UK buyout activity seen in 2001. CMBOR also announced that the total buyout value for 2001 was £19.3bn, a fall of almost 20 per cent on the 2000 figure of £23.9bn, and the first year on year drop since 1993.

There have already been 140 deals recorded to date in 2002, roughly in line with first quarter figures for the 2001 (154) and 2000 (124). The main drop in activity has been towards the top end of the market, where there have been only four £100m plus deals recorded this year.

The survey also highlights an increasing number of secondary buyouts. In the first two months of 2002, 11 secondary buyouts have been completed, compared with 30 for the whole of 2001.

Tom Lamb, Managing Director UK of Barclays Private Equity, which commissioned the research in conjunction with Deloitte & Touche, said that a turnaround in deal volume was not imminent: “Although the upturn in headline numbers looks encouraging, we are still some way from a recovery. The downturn has not been long enough or deep enough to cause the sort of pricing dislocation which we saw in the early 90’s.' 

He added that although companies were looking to make disposals in the near future, the economic recovery was not sufficiently advanced at present.“We expect to see a surge in buyouts from private vendors in the second quarter when the new 10 per cent capital gains tax rate kicks in. However, this is likely to favour the small and mid-market deal segments.”