2004 was a record year for the European buyout market by value of deals with the mid-market showing a strong increase, according to the latest European Buyout Review due to be published in April 2005 by Initiative Europe, an Incisive Media Company, in association with Bridgepoint. The value of the UK market also saw an increase for the first time in three years with the German market showing further signs of recovery.
The total value of European buyouts in 2004 was up 22% from the
previous year to €76.6 billion with the volume of deals increasing
by 17% to 480 transactions in the year. The average value of a
buyout transaction in Europe grew by 4.6% to €160 million.
The mid-market showed a further rise in 2004 with the value of
transactions in the €50m to €500m investment range increasing by
over 60% to €31.2 billion in 2004 and the volume of deals up 40% in
The volume of deals in the €500m to €1 billion investment range
saw the most significant increase up 71% in the period. However,
the number of €1 billion+ leveraged buyouts fell with 27% fewer
deals of this size recorded in 2004.
The European Buyout Review published annually by Initiative
Europe provides comprehensive statistics on the level and use of
private equity in buyouts across Europe.
- Disposal of non-core assets from a European parent most popular
type of transaction: the volume of buyouts from a European parent
increased by 68% in 2004 to 32 transactions with the value of these
deals up 65% to €4.8 billion in the year.
- Volume of public-to-privates declined: although the number of
public-to-private transactions in 2003 showed a marked increase in
2003, the volume of public-to-privates fell in 2004 by 30% in 2004
to 18 transactions although there was an 11% increase in the
overall value of these deals.
- Number of secondary transactions grew: the number of
secondaries in 2004 was up by 40% with the total value of these
transactions up by 68% to over €2.4 billion reflecting some of the
large secondary transactions during the year.
By country / region:
- UK buyout market remains resilient: despite concerns that the
UK buyout market may be slowing, the volume of UK buyouts increased
for the first time in three years, up 27% with a 12% increase in
the overall value of UK deals.
- UK still dominates European buyout activity: in 2004, the UK
and Ireland remained the largest buyout market in Europe,
representing 35% of all European buyouts by value and 39% by
volume. Germany showed a significant increase representing 26% of
the overall value of the European buyout market in 2004, up from
18% in 2003.
- Volume of buyout activity in France fell: the volume of buyouts
in France fell by 18% in 2004 to 84 deals. The overall value of
deals was up 13% in the period to €10.7 billion following a 30%
decrease in 2003.
- German market shows continued recovery: the value of deals in
Germany was up 77% in 2004 with the number of deals rising by 22%.
This follows a 50% increase in the level of investment in Germany
in 2003 where the volume of deals was up by over a third in the
- Nordic region remains buoyant: the majority of the Nordic
countries continued to attract increased levels of private equity
investment. In particular, the volume of deals in Norway jumped
from 2 in 2003 to 15 in 2004 with the overall value of buyouts
rising almost 22 times to just under €1 billion. The value of
buyouts in both Finland and Sweden rose by almost two times.
Private equity investment in the retail, healthcare and food
sectors showed the most significant growth in 2004.
- Healthcare buyouts popular in 2004: the volume of European
healthcare buyouts rose by almost 2.5 times in 2004 with the value
of deals in the sector almost tripling to €3.3 billion in 2004
compared to €1.2 billion in 2003.
- Food sector attracts significant investment: the total value of
buyouts in food manufacturing companies was up over 3.5 times in
2004 to €3.6 billion with the amount invested in food and drug
retailers showing an almost four-fold increase in the same period
to €1.2 billion.
- Volume of retail buyouts doubled: the number of buyouts of
general retailers more than doubled in 2004 with the value of deals
up 89% to €8.6 billion. This follows a 25% decline in the value of
deals in the sector in 2003. Deals in 2004 included the €1 billion
buyout of CBR, the German ladies' fashion group, and the €585m
buyout of the supermarket operator Ahold in Spain. UK deals
included the buyouts of Pets at Home, Hobbs and Faith shoes.
- Support services shows almost four-fold increase in two years:
the value of buyouts in European support services companies more
than doubled in 2004, rising to €9.3 billion with a 26% increase in
the volume of buyouts in the sector. This is a substantial rise
from the €2.5 billion invested in 2002.
- Media and leisure sectors show marked decline in 2004: the
overall value of buyouts in media and photography companies fell by
56% from 2003. In the leisure sector, the number of buyouts dropped
by 33% and the amount invested almost halved to €3.1 billion in
2004. Similarly in the restaurant and pubs sector, the level of
overall investment fell by 86% last year.
Commenting on the research, Kevin Reynolds, the partner
responsible for Bridgepoint's investment activity in the UK,
"2004 has been a record year for European buyouts and reaffirms
the confidence in the buyout market, in particular showing a rise
for a second consecutive year. Despite indicators in previous years
that the UK buyout market was slowing, 2004 has proved that the
market remains robust and dealflow is strong with the UK still
accounting for over a third of all buyout activity in Western
"In particular, the mid-market saw significant growth last year,
with the majority of vendors being parent companies across Europe
looking to dispose of non-core assets. We believe this is a trend
which is likely to continue well into 2005 and we remain confident
of attractive investment opportunities across Europe."
Guy Waller, Editor in Chief at Initiative Europe, added:
"2004 was an important year for the European buyout market after
a period of contraction, and all the indications suggest that the
growth pattern will continue, with corporate groups, family owners
and private equity groups themselves all keen to divest. In
addition, the supply of capital look strong: there is unparalleled
appetite among the providers of leverage and European buyout
players are expected to be back out in force raising new funds in