EUROPE - Value of buyouts plunges to five year low

The number of deals recorded across the region also fell substantially from 824 to 527, though the fact that this only represented a 30% decline - half as much as that seen in terms of value - equates to a significant drop in terms of average deal size. This was largely due to a slowdown in mega-deals, which had dominated the market over the previous three years. EUR 1bn+ transactions were down by 71% and 77% in terms of volume and value respectively, with this area of the market accounting for just 29% of the overall value total, a substantial fall from the 50% it represented in 2007. By contrast, smaller deals remained much more steady, with transactions in the EUR 25-50m value range falling by just 6%.

The UK and Ireland continued to be by far the largest region, accounting for 32% of activity by value, though this was down from 40% in 2007. Indeed, declines were observed broadly across the continent with virtually all countries seeing a drop in both volume and value terms over the year. Italy bucked the general downward trend by recording a 13% increase in value to EUR 9.1bn and a remarkable 48% surge in activity - the fifth consecutive year that volume has risen in the country. Portugal also saw a dramatic 337% upturn in value from £400m to £1.6bn, though this was almost entirely down to a single transaction - Magnum Industrial Partners' €1.2bn investment in electricity company 'Enersis.

Unsurprisingly, given the decline in leverage multiples and therefore a drop in the value buyers are prepared to pay for businesses, secondary buyouts saw a substantial drop off following three years of consistent increases. The overall value of secondary buyouts in Europe totalled €21.6bn in 2008 - a year-on-year decrease of 74% - though the category remained the largest by value with a 30% share of the market, down from 46% in 2007. The number of public-to-private transactions remained fairly stable over the 12 months, though the decreased value of listed businesses was reflected in a large drop in the value of these deals, which fell from EUR 37.3bn to EUR 14.8bn - though this still represented 20% of the overall total, the same proportion as in 2007. Buyouts sourced from family or private vendors continued to be the most prolific source of deal activity, despite a 27% drop in transactions coming from this vendor type.

The European Buyout Review, now in its 20th year, is due to be published in March 2009 by unquote" in association with Bridgepoint. For further information please contact Emanuel Eftimiu (+44 207 004 7464), or to order a copy contact Laura Bowyer (+44 207 004 7457).

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