Buyouts boost M&A market

In spite of the lull in the UK M&A market buyouts continue to perform strongly with total value for the first six months up 56 per cent to GBP13.5 billion. M&A activity, however, fell 71 per cent, according to the Centre for Management Buy-Out Research (CMBOR).

Research shows the buyout market accounted for over half of M&A activity. Chris Ward, head of advisory services at Deloitte & Touche Corporate Finance, which co-sponsored the research with Barclays Private Equity, said: “The current lack of appetite for acquisitions by most corporates means auction processes are becoming a mechanism to achieve a reasonable price from a venture capitalist rather than ramping up competitive tension between hungry buyers.”

Sources of buyouts have seen a shift in the first half of 2001 with transactions from family- and privately owned companies accounting for 22.2 per cent of the market, the lowest level for 15 years. Buyouts from receivership more than doubled to provide 11 per cent of deals to date in 2001.

The 78 exits recorded for the period witnessed a decline of 42 per cent compared with 2000. Receiverships accounted for 44 per cent of this figure, giving cause for concern.

Ward said: “In current market conditions, with fewer trade buyers in sight, limited IPO activity and concerns surrounding corporate profitability, it is not surprising that receiverships figure heavily in percentage terms in exit statistics.”

On a more positive note, he adds that receiverships, whether previously buyouts or not, provide buying opportunities and may also give a welcome boost to deal volume at the bottom end of the market.