Annual Buyout Review: aggregate value reaches new peak

European buyout value hit a new post-crisis high in 2018, despite a moderation in volume. Total enterprise value came to €182bn, a 19% climb on the previous year, as volume fell 2% to 1,018. While the dip in deal numbers ends a four-year run of rising dealflow, the year was still the second busiest in European private equity history.

Deal value increased in every region except the UK & Ireland and Iberia. Value in the UK & Ireland fell 21% to €33.9bn, due almost entirely to weakness in the UK market, where there was a drop in the amount of capital invested in deals valued in excess of €500m. However, the mid-market posted a solid performance.

High levels of mid-market activity were observed across Europe. The total number of deals in each of the €5-25m, €25-50m and €50m-250m enterprise value ranges rose for at least the third consecutive year. The slowdown was in deals valued below €25m and in the €500m-1bn range.

A key factor weighing on dealflow in 2018 was the mismatch in pricing expectations between buy-side GPs and vendors. Renewed vigour in European macroeconomic conditions has boosted earnings in the past year or two, and business owners, aware that the market is competitive, are seeking high multiples based on their latest financials. However, GPs are becoming more cautious on the macroeconomic outlook, resulting in a pricing mismatch that has stalled a number of deals.

The outlook for 2019 is mixed, with the market wary of macro factors and politics, but optimistic on trends such as technology, especially automation.

Click here to download the 2019 Annual Buyout Review, including full statistical breakdowns and fundraising analysis for all key European geographies

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