Welcome to the jungle

01 December 2008

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As the year ends, we can definitely say 2008 was an annus horribilis. The stormy skies observed from afar in the summer of 2007 did little to prepare us for the vicissitudes of the market. It feels like hurricane season in the Caribbean: you are barely out of a storm when another one hits

The trickle of deals that followed a strong first half came to an abrupt halt with the September collapse of Lehman Brothers, when the pipeline suddenly dried up. According to industry sources, negotiations for the deals we are seeing completed in this end of year began in June/July or even earlier.

Despite being surrounded by economies in dire straits, Italy actually managed to make headlines with a few large transactions such as the EUR800m+ buyout of N&W in Q4, Moclear's EUR460m buyout in August as well as the EUR1bn Technogym deal earlier this year; not bad for a market that has traditionally been seen as a quiet one vis-a-vis the rest of Europe.

Predictions for the year ahead are conservative but not pessimistic. The first six months of the year are expected to be slow against an uncertain economic backdrop but Baron Rothschild's assertion that "the time to buy is when there's blood in the streets," echoes in many an investor's ear.

Indeed, contrarian investors have historically made their best investments in times of difficulty, whether it is after the oil shocks of the 70s, the crash of the Dow in the late 80s or the 9/11 attacks. Swimming against the current is not for the faint-hearted but it can definitely pay off.

In this sense, 2009 is likely to bring more corporates in need of selling their non-strategic assets, while other companies may find themselves in a turnaround scenario (restructuring specialist Alvarez & Marsal envisages beefing up headcount 50% to cope with anticipated demand). Secondaries are expected to flourish.

Opportunities are born of other's adversities and like in every game, there will be losers. After all, Rothschild's complete quote is believed to be: "The best time to buy when there's blood in the streets, even if the blood is your own."

... It won't all be fun and games but there will be room to play!

Yours sincerely,

Francinia Protti-Alvarez

Editor, Southern Europe unquote"

Tel: +44 20 7004 7476

francinia.protti-alvarez@incisivemedia.com.