Acquisition volumes jumped as equities’ prices declined in 2011

CORPORATE acquisition volumes jumped in 2011 as prices fell, with the retail sector experiencing the biggest rise, professional services firm BDO revealed yesterday.

The group’s Private Companies Price Index (PCPI) showed the price-earnings multiples paid by trade buyers fell from an average of 11.7 times in 2010 to 10.6 times in 2011, helping boost sales. However, the Private Equity Price Index (PEPI) rose from 12.2 times in 2010 to 12.8 times in 2011, with survey data indicating private equity managers are willing to pay a “scarcity premium” for good quality businesses.

A total of 2,071 deals were completed in 2011, up seven per cent from the 1,928 seen in 2010.

Of the deals, 83 per cent were trade deals and 17 per cent private equity, with a similar split in 2010 and 2011.