European buyout market stalled in 2007

Date: 27-03-2008
Source: Dow Jones Newswires

The European buyout market came to a grinding halt in the second-half of 2007, putting an end to a period of stellar growth, according to a survey released Thursday by the Centre for Management Buy-out Research, or CMBOR. While the total market value of deals for the year reached EUR171 billion to set a record, the figure was just EUR1 billion more than total deal value for 2006.

"The European market was at record levels halfway through 2007 with total value reaching EUR98.2 billion, but the second half fell to its lowest level since 2005, at EUR73.2 billion, showing the extent of the slowdown across Europe," said Tom Lamb, co-head of Barclays Private Equity, which founded CMBOR together with accountancy and consultancy firm Deloitte.

A strong rise in the U.K. market offset a decline elsewhere in Europe with U.K. deals accounting for EUR66.9 billion of the total. Continental Europe deal value fell to EUR104.6 billion, from EUR130.3 billion in 2006, CMBOR said. The number of deals fell slightly in 2007 to 1,436 from 1,482 in 2006 and the average deal size hit EUR119 million, only slightly higher than the previous year's figure of EUR115m.

Sector-wise, non-cyclicals fared better than consumer-driven industries with business and support services recording a rise of 51% and healthcare deals up by 27% on the year.

"Analysis of deals by sector reflects the wider macro-economic trends and slowdown in consumer confidence. Leisure and food & drink deals were down by 54% and 40% respectively," said Mark Pacitti, corporate finance partner at Deloitte Financial Advisory Services.

Meanwhile, Central and Eastern Europe continued to attract interest as private equity firms looked further afield for value. There were 49 buyouts in the region in 2007, compared with just 25 in 2006, although total deal value declined to EUR2.1 billion from EUR2.9 billion, CMBOR said.