Private equity deals accounted for over 50% of all M&A deals in the UK for first nine months of 2005, the first time the industry has done so, according to figures released by the Centre for Management Buyout Research (CMBOR).
The total value of all buyouts in the UK stands at £17.5bn for this period, a 24% increase on the same time last year. Already this figure has surpassed the total value of deals of 2003 (€16.3bn) and 2002 (€15.5bn), and the average value of deals for the first nine months is higher than any entire year on record.
Tom Lamb, co-head of Barclays Private Equity, says the final figure for the year could challenge the record high of £24bn in 2000. He says: “The shape of the buyout market has changed dramatically over the last five years. Secondary buyouts now account for a staggering 40% of market value compared with only 5% in 2001. By way of contrast, traditional primary buyouts from corporate vendors have almost dried-up. They used to account for over half the market but have shrunk to only 15 per cent of deal value in 2005. Four out of the top five deals were secondaries. It remains to be seen whether this level of secondary activity is sustainable and, indeed, desirable. Certainly it looks as if investors in the new breed of ‘jumbo’ buyout funds can look forward to a portfolio dominated by secondary buy-outs.”
Of the top ten deals by value so far this year, four were secondary buyouts, one a partial secondary, and five were public-to-privates, the largest one being the £1.6bn acquisition of Warner Chilcott by DLJ Merchant Banking and JP Morgan Partners in January.