Q4 Barometer: Large-cap deals boost value in a shrinking market

unquote" and SL Capital
15 February 2017

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A spike in number of тЌ1bn+ deals recorded in the final three months of 2016 helped bolster the European private equity market against a further weakening in deal volume, according to the latest unquoteт Private Equity Barometer, published in association with SL Capital Partners.

Overall, the total value of private equity backed deals jumped to €39bn in Q4, up 47% on Q3 and the highest quarterly value since Q3 2015. Yet deal volume continued its decline across all categories, falling from 352 to 323 and marking the weakest quarter since 2005. It was also the eighth consecutive quarterly decline. Year-on-year, the latest figures leave the market down by 20% on 2015 in volume terms and 14% in value.

However, by deal type the statistics show the overall decline in activity has been underpinned by weakness in the early-stage and expansion capital segments and the number of buyouts has actually held up well: in Q4, deal volumes slowed for the second consecutive quarter, edging down to 172 from 178, but this remains well above the 10-quarter low of 140 seen in Q1 2015.

Furthermore, it was the jump in the number of larger buyouts that drove the overall PE market value upwards in the final quarter. Nine deals worth €1bn or more were recorded in the period, propelling the value of buyouts to €36bn from €23bn in Q3. It marks the strongest quarter since Q2 2015.

By region the statistics show that the buyout market was effectively propped up by exceptionally strong levels of activity in Germany and a solid performance in Sweden during the period. In the case of Germany, 36 buyouts were recorded in Q4 – not far from double the figure seen in any one quarter since before 2014. The country was also home to five of the largest 10 transactions with a disclosed value, sending the aggregate value of the market to just below €10bn or around 2.5x the average for the previous eight quarters.

Click here to download the full report, including detailed commentary and statistics for the growth capital and venture capital markets, as well as regional breakdowns.