Q3 Barometer: European deal flow plummets 35%

unquote.com
23 October 2012

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Preliminary figures released today in the Q3 2012 unquoteт Private Equity Barometer, published in association with Arle Capital Partners, paint the picture of a challenging European private equity market.

Private equity dealflow has remained subdued over the three months to September, with the number of transactions completed plummeting 35% to 182 deals. Value has also fallen in the three months to September, though the decline was less severe. The aggregated value dipped 14% to €11.7bn in Q3.

For the second quarter in a row the European buyout deal total stuck to double figures in Q3 2012 with 76 deals completed, down 15% from Q2's total of 89 transactions. Deal value fared rather better, recording a modest fall of just 4% over the three months from €11.2bn to €10.8bn. This value resilience was driven by a significant increase in the €100m-€1bn mid-market segment, where activity rose from 22 to 27 deals and hit the highest level in more than a year.

Click here to read the Q3 2012 unquote" Private Equity Barometer in full.

Commenting on the figures, John Arney, managing partner of Arle Capital Partners, said: "The seemingly intractable mess that Europe's politicians find themselves in has done nothing to inspire confidence in the private equity market over the last quarter and these buyout statistics bear this out.

"While the figures this quarter paint a picture of sluggish dealflow and falling activity levels, there are some interesting positive trends emerging. Average deal size increased to the highest level in a year with the buyout space recording its third consecutive quarterly rise, showing that there is a real hunger to get deals done if macro-circumstances can be overcome.

"The secondary market saw a marked increase in deals making them the most popular type of transaction, ahead of traditionally dominant family and private vendors. At a time when the market is cautious, sellers are finally ready to do deals after months of watching and waiting and they are seeking out receptive buyers in the PE community.

"Looking at the remainder of the year, we see no signs of any significant increase in dealflow. With uncertainty remaining across the European markets, we face a glacial end to 2012 unless convincing political intervention thaws the market."