Total value of deals in the global automotive sector fell by some 40% from $35bn in 2002 to $21bn in 2003, according to a report from PricewaterhouseCoopers Corporate Finance with 588 transactions in 2003 compared to 621 in 2002
Private equity players however continue to be attracted to the automotive industry due to its strong, sustainable cash flows, clear forward visibility and good turnaround and exit prospects, as well as relatively low multiples. According to PwC, private equity houses are the leading automotive industry consolidators.
With a marked absence of trade buyers over the last two years, the private equity community has had the automotive M&A arena almost to itself. PwC recorded 100 private equity deals worth a combined $9.6bn during 2003 with private equity firms accounting for 45% of total deal values and 17% total deal numbers.
The components sector was the most fertile hunting ground with private equity houses securing component companies worth a combined $6.6bn during 2003 representing 52% of total deal value in this sector. Of the ten largest deals in the components sector worldwide during 2003, eight were backed by financial investors.