The value of listed UK companies snapped up by private equity firms has surged to £29.3bn in the last 12 months amid a UK dealmaking boom, new research has revealed.
The number of ‘take private’ deals, where listed companies are taken off public markets by private equity, surged to 19 last year from just five in 2020 when the pandemic hammered dealmaking, according to research from accountancy firm BDO.
BDO’s head of M&A John Stephan said lower share prices had made firms open to a move away from public markets.
“Many UK listed company directors continue to be frustrated by the low valuations put on their shares. That makes them more receptive to takeovers from PE houses,” he said.
“The reputation of PE firms amongst FTSE directors has dramatically improved over the last 20 years, so going private no longer seems such an unusual move.”
While 2021 may prove a high watermark for ‘take private’ deals following a pandemic-induced lull in 2020, BDO said, deal volumes could continue to soar this year if stock market valuations remain under pressure, along with investor jitters following the invasion of Ukraine.
PE funds are also sitting on record amounts of dry powder and investors are ramping up pressure on them to deploy it this year.
Data from S&P at the end of 2021 showed that private equity firms globally have been sitting on a record $2.3tn in unallocated cash, up from just under $2tn in December 2020 and $1.6tn in December 2019.