Annual Buyout Review: Lower-mid-market momentum lifts dealflow

The market had a split performance in 2017. A surge of activity at the lower end boosted volumes, while large-caps were almost entirely responsible for a big climb in deal value.

Overall, Europe's buyout activity reached new post-crisis highs in 2017 thanks to a widespread resurgence in the lower-mid-markets. There were 919 buyouts over the course of the year with an aggregate enterprise value of €142.3bn, both up 19%. Transactions rose in each of the eight regions covered in this volume with some individual countries performing especially strongly; the Netherlands, Spain, Poland and Denmark recorded all-time highs for annual buyout numbers.

The sustained recovery in the European economy is having a noticeable impact on the outlook for smaller, more domestically focused businesses. By size range, it is clear that the most significant impact on the overall volume statistics came from the lower-mid-cap market segment (€5-50m), where dealflow jumped by almost 34%. Conversely, the value of the €1bn+ mega-deals jumped almost 50% from €36.9bn to €54.6bn.

The higher volumes in the lower-mid-cap segments naturally meant more deals sourced from family and private vendors – 517 against last year's 393 – but secondary buyouts are also on the up at 294 compared with last year's 272.

As well as an improving economic environment, higher pricing against a background of political uncertainty could be fuelling vendor appetite to sell, especially in the UK & Ireland region, which saw a dramatic increase in sales to private equity from family and private vendors from 90 to 131. Sales from private vendors also climbed strongly in DACH and Benelux.

The UK & Ireland finished top of the pile in terms of both transaction volume and value. Looking ahead to 2018, "cautiously optimistic" is the message from GPs.

Click here to download the 2018 Annual Buyout Review, including full statistical breakdowns for all key European geographies

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