82% of GPs convinced dealflow improving

The vast majority of GPs in Europe feel deal flow will improve in 2010, with slightly more than half also more upbeat on the quality of those deals. The findings are from an unquote" straw poll of 85 fund managers in the UK and across the Continent to assess the sentiment as the new year is ushered in.

Nordic GPs are the most upbeat, with a staggering 95% optimistic that 2010 will bring increased activity. The region is also most convinced that the quality of what they see will improve, with two thirds expecting an improvement in IMs that come across their desks.

Investors in the UK were second most positive, with 88% convinced activity would pick up in 2010. Interestingly, they were least expectant of an increase in quality, with respondents split 50:50 on whether it would remain the same or improve. Mercifully, just 5% feared quality would wane in 2010.

This mirrors the predictions of the industry professionals whose comments appear in this issue, as most believe 2010 will witness a pick up of activity in UK debt markets, which will inevitably lead to a surge of new investments. Secondary buyouts could also make their re-appearance in the region due to the narrowing gap between vendor and buyer pricing expectations, and private equity firms needing to score more exits for their hungry investors after a year-long dearth of returns. We are already beginning to see signs of this: by late December, US-based Clayton, Dubilier & Rice managed to complete the £390m buyout of car reseller British Car Auctions from Montagu Private Equity.

Ironically, the two most upbeat regions going forward represented two opposite ends of the spectrum if we look back at the trough 2009 proved in most regions. While markets were down across the board, Nordics suffered the least, with a third drop off in value, against the abysmal UK, which witnessed the most severe downturn with a 77% decrease in deal value.

The DACH region was middle of the road, with three quarters of respondents looking forward to improved dealflow in 2010, though nearly two thirds expect the quality to improve. The region's drop-off in activity was two thirds from 2008's figures.

Sentiment on pricing was more variable, with a third of Nordic respondents feeling prices would rise in 2010, the highest percentage in Europe. French respondents were the least worried about price increases, with just a tenth indicating they expected rises.

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