2008 European buyout values plummet to lowest level in five years

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2008 was a turning point for the buyout industry. The "longest year" marked a significant slow-down in buyout activity across Europe, with large deals being worst hit by difficult economic conditions. The overall value of buyouts plummeted 60% to EUR73bn in 2008, down from more than EUR184bn in the previous year, reveals the new European Buyout Review, due to be published in March 2009 by unquote" in association with Bridgepoint (see page 54). The volume of deals fell by 30% to 572 transactions during the year, compared to 824 in 2007.

The good news comes from the mid-market, which showed greater resilience by declining more slowly than the large cap. The number of buyouts valued at between EUR250m-1bn halved in 2008 with deals in the EUR250-500m range down by 40%. The value of mid-market deals in the EUR250m-1bn range now accounts for 36% of all buyout activity in Europe. The small buyouts have been hardly affected at all: The value of deals in the EUR25-50m range fell by only 6%, on the whole reflecting continuing confidence in buyouts requiring less leverage.

Even though Germany reported higher buyout values than France, with a total buyout value of EUR11.5bn, the German buyout market suffered a drastic 62% fall in value against 2007, with activity falling by 24% to 85. As the global economy appears to head for a prolonged slow-down or recession, the trends that caused the developments in 2008 are likely to linger on and shape 2009 significantly.