SBOs back with a vengeance in Q3

This uptick also allowed SBOs to overtake the traditionally dominant family and private vendors category in Q3: buyouts sourced from fellow GPs accounted for 45% of European buyout dealflow in volume and 70% in value.

The first figure is a marked increase compared to Q2, when 31% of buyouts recorded by unquote" were SBOs. It also highlights the growing importance of "pass the parcel" deals in a European buyout market still in recovery mode.

The number of secondary buyouts as a share of overall activity fell in 2008 and 2009 to 21% and 14% respectively – but it then jumped to 26% in 2010 before reaching a new high of 35% in 2011. This year looks set to follow this trend, with 34% of buyouts completed so far in 2012 having been sourced from other institutional investors.

The safety factor of high-profile, tried-and-trusted assets – many of which have already been scouted by GPs the first time around – can go some way towards explaining the growing importance of SBOs in a volatile market. "At a time when the market is cautious, sellers are finally ready to do deals after months of watching and waiting and they are seeking out receptive buyers in the PE community," said Arle Capital Partners managing director John Arney while commenting on the latest unquote" Private Equity Barometer.

SBOs are also proving popular with lenders, which might in turn be another factor in their resilience. "The 'known quantity' aspect is also important when it comes to financing," Grant Thornton partner David Ascott told unquote" while discussing the primary market back in September. "Debt remains easier to arrange when the banks are already familiar with the asset, while they remain cautious when it comes to primary transactions."

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• Topics
• Buyouts
• Exits
• Secondary buyout
• Market Insight