2007 marked yet another record year for the European buyout industry, despite concerns over the availability of debt to fund buyouts towards the end of the year. The overall value of buyouts totalled €175bn in 2007, according to the latest European Buyout Review due to be published in March by Incisive Media in association with Bridgepoint.
Key highlights: · 2007 shows record value of European buyouts. The overall value of buyouts across Europe rose by 0.7% to €175.3bn (2006: €174bn). The volume of deals rose by 6% to 775 transactions during the year. · The UK market demonstrated the highest level of growth in 2007 with the value of buyouts up by 71% to almost €70bn (2006: €40.8bn). This reflects the highest rise in the value of UK deals in the past five years. · 40% of all European buyouts were done in the UK. In 2007, a significantly higher proportion of buyouts were completed in the UK compared to the rest of Europe. In 2007, the UK comprised almost 40% of the overall value of buyouts across Europe, compared to only 23% in 2006. · Mid-market activity significantly fuelled the growth of European buyout market. European buyouts valued at between €250m to €1bn increased by over 38% in 2007 with deals in the €250-500m range up by 43%. This demonstrates a shift towards mid-market transactions in the absence of fewer multi-billion euro buyouts during the year. · €1bn plus deals represent a smaller proportion of the market. The value of €1bn plus buyouts in 2007 fell by 14% with a 5% volume decline. By value, €1bn plus deals still comprised 50% of the European buyout market in 2007 although this fell from 59% in 2006. By vendor type: · Family and private vendors continued to generate the highest volume of buyouts. By volume, buyouts from this type of vendor were up by 19% and represented 47% of all European buyouts in 2007. This showed a slight increase over the 42% in 2006. · Popularity of secondary buyouts rose significantly. In 2007, the overall value of secondary buyouts in Europe totalled €77.9bn, an increase of 24%. By value, secondary buyouts comprised over 44% of all European buyouts, up from 36% in 2006. · Public-to-private transactions showed a 15% decline in value. In 2007, PTPs represented 19% of the overall value of buyouts in Europe compared to 23% in 2006. Despite the huge Boots buyout, the overall value of PTPs in 2007 fell to €33.4bn (2006: 39bn) although this is widely expected to increase in 2008 given the significant decline in listed company valuations. By sector: · Value of buyouts in services sector up 137%. The services sector saw the highest rise in the level of investment. In 2007, the value of buyouts in this sector grew by 137% to €22bn (2006: €9.3bn) driven primarily by an increase in the number of €1 billion + transactions in the year · Value of buyouts in financial services more than doubled. Financial services also saw a significant rise. In 2007, whilst the volume of buyouts only rose by 24%, the overall value more than doubled to €10.9bn (2006: €4.7bn). · Industrials sector attracts highest levels of investment. The industrials sector has continued to attract the highest levels of levels of investment in Europe. By value, the sector comprised 28% of all buyouts in Europe in 2007 marginally up on 2006. The overall value and volume of deals in this sector rose by 7% and 10% respectively. · The consumer segment retained its place as the second most active in 2007, with the number of deals recorded up marginally to 214 (27.6% of the total) from 208. In value terms, the huge Alliance Boots delisting by KKR drove the value of consumer deals to €58.4bn - easily the highest value of any one sector and a full third of the European total · Value of media buyouts fell dramatically in 2007. The media sector saw a 57% decline in the value of buyouts in 2007 from €26bn in 2006 (the highest recorded in the past five years) to €11.5bn in 2007. The volume of deals only fell by 10%. The value of overall buyouts in 2006 was skewed by sizeable deals including the €8.7bn buyout of VNU and the €4.9bn and €3.3bn buyouts of TDF and Pages Jaunes respectively. · 70% decline in value of technology buyouts. In 2007, the overall value of buyouts in the technology sector fell to €8bn compared to €27.6bn in 2006 (the highest recorded in the past five years). By country / region: · Buyout activity in Iberia saw the most significant rise in 2007. In 2007, the total value of buyouts rose by 67% to €7.5bn, although the volume of deals only rose by 44%. The number of mid market deals (€50m to €1 billion) rose from 14 in 2006 to 22 in 2007. · Value of German buyouts tops France for first time since 2004. In 2007, the value of buyouts in Germany was up by 14% to €29.1bn, compared to €21.4bn in France. This is the first time since 2004 that Germany has recorded a higher aggregate value of buyouts. By value, buyouts in Germany represented 16% of all European buyouts, second only to the UK. · France saw a record number of buyouts. The number of buyouts recorded in France broke the 200-mark for the first time, leaving it just shy of the figure for the UK. However, the overall value of buyouts in France fell by 38% to €21.4bn, representing 12% of European buyouts compared (20% in 2006). · Value of buyouts in the Netherlands halved in 2007. The overall value of deals in the Netherlands fell by 54% to €11.5bn (2006: €25bn) although the volume of deals rose by 19%. This is largely a reflection of significant deals in 2006 including the €8.7bn buyout of VNU and the €8.3bn acquisition of Phillips Semiconductors. Commenting on the research findings, Kevin Reynolds, Partner at Bridgepoint, said: "€1 billion plus buyouts were far less a feature of the European buyout market in 2007. Despite the slowdown in the market towards the end of the year as the credit crunch started to bite, 2007 still saw the highest level of buyout activity ever recorded. The mid-market saw, by far, the greatest level of activity - especially in the €250-500m range - with UK buyout activity remaining very buoyant."
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