The beauty of small things

From one month (or even week) to the next, any predictions may end up lacking sufficient empirical evidence to support them.

However, there are a few constants, such as the prevalence of growth capital transactions, which, despite the fluctuations in volume, illustrate the resilience of the (lower) mid-market.

Given the persistent strain on the debt markets, it is no surprise that the smallcap sector (defined as deals worth less than €50m) has held up relatively well in the last 18 months, as these deals are typically conservative when it comes to debt, and generally rely on a strong regional market presence. In fact, the sector was the one with the highest volume of deals in 2009 and looks poised to benefit from the environment in 2010.

But small-cap deals seldom make for impressive headlines as they lack the "glamour" associated with larger transactions.

But glamour may not always be a good thing. It attracts attention when things are good just as it does when things go sour. Perfect examples are the large LBOs that closed in the boom years, some of which are now facing or undergoing debt restructurings. NXP, for instance, is currently said to be looking to list following several attempts aimed at reducing its debt.

It is safe to say (this month) that bigger is not always better.

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