Private equity funding within the European M&A market looks set to accelerate in the coming six months, largely due to the restructuring of European industry, according to a report produced by private equity provider Cinven, in association with M&A intelligence company, mergermarket. This growth is being boosted largely by the restructuring of European industry that is leading to increased opportunities for private equity, in spite of the difficult economic climate. The report is based on the views expressed by over 150 managing directors in leading investment banks specialising in UK, French and German deals.
The area of greatest growth is anticipated in deals of between EURO850 million and EURO1.7 billion. The majority of respondents (78 per cent) believe that the participation ofprivate equity players within the overall M&A market will increase.
This view in particular is strongest in continental Europe, with 90 per cent of French players and 79 per cent of German players expecting growth, compared with 63 per cent in the UK.
However, a mere 8 per cent of respondents expect an improvement in company earnings over the next six months, compared to 57 per cent anticipating a decline and there is a high percentage (63 per cent) who predict that the volume of companies seeking to delist from stock markets will be on the up.
Almost half of those surveyed expect further declines in overall economic climate, while there is little expectation of a recovery in European technology stock markets with over half of respondents anticipating a further fall in indices compared to only 15 per cent expecting an increase.
John Brown, deputy managing director of Cinven, said: “The report confirms our belief that the restructuring of European industry will lead to increased opportunities for private equity, even if the overall economic climate becomes more difficult.” He added that with more pressure on share prices, the pressure on corporate management to deliver greater focus to their businesses by divesting non-core assets will intensify.