Private buyout deals reach a four-year high

Michael Bow
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PRIVATE equity buyouts in the UK are returning to pre-financial crisis levels, with buyout leverages and deals worth over £1bn at their highest point since 2008, data released today reveals.

Figures from the Centre for Management Buyout Research shows that three buyout deals have surpassed the £1bn mark this year, the first time this has happened since 2008.

The proportion of debt to equity on buyout deals is also at its highest since 2008, hitting 45 per cent.

Experts at Ernst & Young, which sponsored the research, said the higher debt-to-equity level was a sign of increasing bank liquidity and banks’ willingness to fund good quality deals.

Buyout deals this year are set to surpass levels seen in 2011, with values for the first three quarters reaching £11.7bn, compared to last year’s overall total of £12.6bn.

Deal volumes are also set to beat last year’s total after reaching 144 for the first three quarters compared to 187 in total for the whole of last year, as overseas investors from the US and Japan drive the increase.

Sachin Date, private equity leader for Ernst & Young said: “What we are seeing is a trend towards overseas buyers, which are keen to establish a foothold in Europe, acquiring UK private equity assets to mitigate the risks and volatility currently associated with the Eurozone.”

Smaller deals in the £10-£100m bracket have also increased this year, hitting 70 compared to 66 last year.