Value of European buyouts rose by almost 35% in 2015

European Highlights
• Value of European buyouts rose by almost 35% in 2015 to reach €125.2bn
• Deal volume in 2015 slipped back 4% from 600 to 578
• The weakness in the market was seen entirely in deals valued at less than €250m, where each size bracket saw a decline in transaction numbers
• Conversely the three €250m+ brackets grew overall by 40%, with the number of deals rising from 86 to 122. The €500m-1bn segment saw the sharpest rises (+52%)
• In value terms the €250m+ brackets performed even more strongly, with an average increase over 2014 figures of more than 50% to reach €96.5bn (more than the overall market total for 2014). The value of €1bn+ deals rose by more than 60% to reach nearly €50bn
• Much of the shift towards larger deals was driven by activity in secondary markets, with the value peer-to-peer buyouts leaping by 82% to €78.3bn
• Dealflow from corporate vendors fell most sharply, with volume down 28% from 108 to 78 and value down 35% to €16.4bn
• By sector, the most significant gains were seen in the consumer and financials sectors, up 11% and 16% respectively in volume. Meanwhile, industrials saw the sharpest falls

Regional Highlights
• Overall, the fortunes of the European regions were split evenly in 2015, with four growing and four contracting. The largest volume declines were seen in the UK and the Nordic regions, which each saw dealflow fall by around 20%
• The standout performances in terms of dealflow were France (up 23% from 94 to 116) and Italy (up 26% to 49 deals). The DACH region fell back by 7% to record 68 deals.
• In value terms activity at the larger end of the market drove the UK, France, Italy and the Benelux region to record sharp increases. Only DACH and the Nordic countries saw any decline.

 

According to figures published today by unquote" data, the value of the European buyout market hit an eight-year high in 2015 as the trend towards fewer, larger deals became sharply more pronounced. Fuelled by a surge in the number of €250m+ buyouts, the overall value of the market rose by almost 35% to reach €125.2bn. It is the first time the €100bn barrier has been exceeded since the industry's pre-crisis high water mark in 2007.

However, at the other end of the market, activity in the smaller and mid-cap segments – traditionally the heartland of Europe's buyout industry – slowed sharply over the last year. Despite ample dry powder and a plentiful supply of debt, the number of sub-€250m deals dropped by 11%, pulling the overall European total down to 578 from the 600 seen in 2014 (a fall of 4%).

In regional terms, there were contrasting fortunes among the main markets: on one hand the recovery in the French market accelerated sharply (up 23% in volume) after two years of slow recovery, while on the other, the UK fell to a five-year low (down 21% to 149). Both, though, benefited from the burst of activity at the top end of the scale and saw significant growth in deal values, with the UK racking up €32.8bn in deals (the fourth highest total on record) and France €22.8bn.

Meanwhile the market in German-speaking regions remained subdued, falling slightly in both volume and value. Among the smaller regions, Italy produced the standout figures, with volume rising 26% to a five-year high of 49 deals and value reaching an all-time record €14.1bn.

As far as deal sources are concerned, secondary buyouts registered their third annual rise and accounted for more than 40% of the market by volume, and with many of them in the upper size brackets, they represented a massive 63% of the market value. On the other hand the number of deals sourced from corporate vendors slumped from 108 to 78, suggesting that these groups are more likely to be buying than selling.

Overall the statistical picture points to a challenging market – one in which investors are being pressured to pay steep prices for assets in order to deploy their cash piles, and one increasingly reliant on peer-to-peer sales.

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