The mega private equity deal is back in the UK, according to the latest management buyout (MBO) research from KPMG. While the number of deals completed so far this year – at 65 – trails the 72 completed in the first half of 2010, there have been two deals at the £1bn mark.
Michael McDonagh, private equity partner at KPMG, commented: “While we have seen a third less deals in the last quarter compared with the year before (24 for Q2 2011 versus 36 for Q2 2010), the average deal size is up 55% at £155m (compared with £101m for Q2 2010). Today’s story is quite different to that of last year when we saw a high volume of mid market transactions driving private equity activity in the UK. This year, we’ve seen the volume turned down but those who are striking deals being braver and securing much bigger values.
“We have seen many private equity deals, particularly and perhaps unsurprisingly in the retail sector, fall away this year as negative economic factors take the shine off the sales process. However, the RAC and Priory deals were bright billion pound spots in an otherwise fragile environment. Indeed mid market fragility has seen the number of deals almost half in the past few months compared with the first quarter of the year.”
Commenting on prospects for private equity activity for the rest of the year and into 2012, McDonagh added: “While the negative economic indicators cannot be ignored and will undoubtedly put many vendors and acquirers off, the billion pound deals show that the debt markets are open again for private equity houses with big ambitions. Indeed the pan European market is looking buoyant with a third billion ‘big ticket’ deal announced in June (EQT/Securitas). Attractive leverage packages, buttressed by a strong high yield market, suggest we could see more ‘mega’ deal activity in the UK and across Europe, following the US market where large deals have been growing in number since 2010.”
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For further information please contact:
Sorrelle Cooper, Senior PR manager, KPMG: 020 7694 8527 / 07932 078218
sorrelle.cooper@kpmg.co.uk
About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with nearly 11,000 partners and staff. The UK firm recorded a turnover of £1.6 billion in the year ended September 2010. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 150 countries and have more than 138,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.
