Private equity 'at risk of outbidding by trade'

Hayes, who recently joined law firm Paul Hastings as private equity partner, said that this is likely to happen in cases where financial buyers reduce the prices they are willing to offer due to the global economic uncertainty.

"Leverage is only one of many factors which will have an impact on purchase prices," he added. "If a business has an obvious growth story, purchasers may be willing to pay a higher proportion of the purchase price using equity rather than debt."

His comments come in the wake of today's announcement that Cinven is seeking a buyer for its Swedish tool distributor, Ahlsell. Goldman Sachs has been mandated to run a sales process for the company, which is valued at more than €1.5bn. Sales brochures are expected to be sent out in the autumn, following bids from several rival private equity firms in recent months.

Ahlsell generated a turnover of around €2.5bn in 2010 and employs a staff of 5,300, compared to 4,000 when Cinven bought it five years ago. The 2006 deal - worth around €1.4bn - was at the time one of the largest ever deals to take place in Sweden.

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• Topics
• Nordics
• Industrials
• Cinven
• Goldman Sachs
• Sweden