No immunity to credit crunch

The Continental European buyout market has collapsed to its lowest level since 2004 according to the latest figures from the Centre for Management Buyout Research (CMBOR).

Reaching just €22.7bn in the first six months of 2008, the market is down to almost a third of what it was for the same period in 2007 (€63.4bn) and 2006 (€65.1bn). In terms of numbers, the volume of buyouts is also down 19% than 2007, with just 325 deals completed compared with 401 completed in the previous year.

The whole of the European market looks gloomy, with just 637 deals worth €38.4bn completed across the first six months, compared with 752 worth €99.7bn in the same period last year.

Germany and France are by far the most active markets in Continental Europe, completing 67 and 66 buyouts respectively in the first half of the year. However, for France it looks like 2008 will be a huge drop, with only 66 completed buyouts in the first half of 2008, the market is severely down on the 228 buyouts completed during the whole of 2007. In terms of value, Germany continues to lead the way with a market value of €6.5bn, followed by Italy at €4.2bn and France €3.1bn.

Although its Continental rivals are waning, the UK market has held up well, making almost half of all European deals (312) worth €15.6bn. The UK is also showing resilience in the mega deal market. Of the four mega deals that have contributed to the €6.4bn total in the first half of 2008, the UK was responsible for three of them. During the whole of 2007, the total value of European buyouts valued at over €1bn reached €86bn, but this has fallen in the first half of 2008 to €6.4bn.

Director of Barclays Private Equity and CMBOR sponsor Christian Marriott concluded: “The prospect of a dramatic recovery in the European buy-out market seems unlikely in the short-term. While deals at the lower end of the market will rumble on, the buy-out market peaks of 2007 and 2006 have been driven by the mega deals, and these deals are still proving elusive.”