Although market conditions remain difficult for private equity transactions across the spectrum, primary LBOs seem to have fared better than SBOs in the third quarter. Greg Gille reports

Unquote" recorded 40 buyouts sourced from a private vendor in Q3, down by only 9% from the previous quarter. Primary deals have therefore weathered the tough market conditions rather well, amid a sharper decrease in dealflow across the board - with buyout numbers dropping by a quarter overall compared to Q2.

Notable primary deals in the past quarter included the €600m buyout of Swiss sports marketing agency Infront Sports & Media by Bridgepoint in September, as well as 3i backing the €500m MBO of Dutch retailer Action in July.

It would seem that SBOs were hit particularly hard by the slowdown in activity, with the volume of such transactions registering a steep 40% decline between Q2 and Q3. Value-wise, both primary and secondary deals were hurt with the overall amounts invested cut by more than half in Q3.

It appears that the current contraction in bank lending across Europe has pushed GPs to contemplate smaller deals - the average buyout value dropped by a third to €145m in Q3 - which logically favours primary LBOs as they tend to be smaller.

That is not to say that the resulting landscape is exceptional though. Primary deals accounted for 40% of all buyouts in Q3, while SBOs represented just over a third. This may be an almost exact reversal of the figures recorded in the previous quarter, but not a massive departure from historical averages.

If anything, primary deals are still struggling to match their average market share of around 50% of all buyouts over the past decade. Meanwhile, SBOs are still relatively plentiful, given that they historically account for roughly a quarter of Europe's buyout dealflow.

What these figures do highlight is the "mini-bubble" experienced by the industry just before the summer - when unquote" witnessed secondary deals almost doubling in volume compared to Q1, while the overall value of such transactions nearly trebled. It would seem that GPs were eager to quickly take advantage of favourable financing conditions to eat away at their dry powder reserves or downsize their portfolio ahead of fundraising efforts - making SBOs a convenient proposition for all parties.