Business services keeps UK mid-market ticking

John Bakie
05 March 2012

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The UK's hugely important services sector remained key to the private equity market in the ТЃ5-150m segment. The 45 deals recorded in 2011 makes it easily the most important in volume terms, while its lower average deal size leaves it number two behind industrials in value terms.

The sector produced only one deal above £100m in 2011: the acquisition of Pattonair in the Midlands for a little more than £148m. Despite the changes in public and private sector procurement and cutbacks in public spending, this sector will continue to be critical to the UK economy.

After a poor year in 2010 and despite continuing threats to the UK's manufacturing and production industries, dealflow in the industrials sector fared comparatively well in 2011. In all, 38 deals worth a little less than £1.4bn were completed in the sector. Among them were three deals estimated to be worth more than £100m, though the largest deal with a disclosed value was the £80m buyout of Nampak Europe.

Undoubtedly the biggest casualty in sector terms during 2011 were all the segments associated with consumer industries. Consumer deals were the second most numerous in 2010, narrowly behind services. In 2011 the number of consumer deals recorded fell back by more than 25% to just 29, worth slightly in excess of £1bn.

The £105m buyout of AllSaints Spitalfields was the only consumer related deal in 2011 with a confirmed value in three-figure millions, though one other is estimated to have achieved this.

By contrast, both the number and value of deals in the technology sectors climbed noticeably in 2011, boosted by activity in the software and computer services subsector. Overall 26 technology deals, worth just over £950m were recorded in the £5-150m size bracket. Two £100m+ deals were among these, including the £121m+ acquisition of SPP Process Technology Systems in Wales.