Buy-outs slump as morale takes a knock in 2011

WEAKENING business confidence has seen the value of UK buy-outs slump this year, according to research published yesterday.

Buy-outs in the first three quarters came to £7.8bn, down from £13bn over the same period last year, the Centre for Management Buyout Research said.

The three months to September have seen the most significant drop in activity, as worries over the global economic slowdown have grown.

Just £1.1bn in buy-outs were recorded in the third quarter, a massive drop from the first two quarters, which both saw buy-out values surpass the £3bn mark.

Christiian Marriott of Barclays Private Equity, which co-sponsored the research, said: “The exit market has declined in the third quarter in line with the overall buyout trend. While the market sentiment remains cautious, increased interest from international corporates in private equity assets is evident and is set to continue.

“By contrast, the IPO market for private equity-backed firms has remained firmly closed for business in the UK,” Marriott added.

Ernst & Young, another co-sponsor of the research, said that smaller deals had become more attractive.