Q2 2002 UK buyout activity

-

KPMG’s survey of UK buyout activity, in the £10 million plus value segment, in the second quarter of 2002 recorded a slight upturn in activity levels.

Compared with the total value of deals in the corresponding quarter of last year, the market has contracted by 33 per cent, according to KPMG. Nevertheless, the rate of decline is slowing given that Q1 2002 was 44 per cent below the total value of deals for the same period last year.

Charles Milner, head of corporate finance within KPMG’s private equity group, says: “We may have seen a modest improvement in the value of activity in the buyout market this quarter but this was mainly due to one large transaction so we should not get carried away with talk of a recovery. Confidence still has to return.” This transaction being the £2.05 billion buyout of Southern Water.

Table 1: Larger UK MBO/MBI/IBOs by value (£m)

£m/ 1997/ 1998/ 1999/ 2000/ 2001/ 2002

10 -25/ 990/ 1,070/ 870/ 1,030/ 770/ 340

25 – 50/ 920/ 1,280/ 1,040/ 720/ 1,010/ 310

50 – 100/ 1,900/ 2,420/ 1,860/ 1,690/ 1,070/ 340

100 – 250/ 1,770/ 1,980/ 3,580/ 3,320/ 2,880/ 670

250+/ 2,810/ 6,130/ 7,030/ 13,840/ 13,330/ 6,270

Total/ 8,390/ 12,880/ 14,380/ 20,600/ 19,060/ 7,930

Source: KPMG Corporate Finance, 3 July 2002

Table 2: Analysis of larger UK MBO/MBI/IBOs by quarter

Quarter/ Larger MBOs number/ Larger MBOs value (£m)/ Larger MBOs average (£m)

1997

I/ 35/ 1,900/ 54

II/ 39/ 1,360/ 35

III/ 38/ 2,250/ 59

IV/ 31/ 2,880/ 93

Total/ 143/ 8,390/ 59

1998

I/ 49/ 4,690/ 96

II/ 38/ 2,390/ 63

III/ 40/ 3,420/ 86

IV/ 39/ 2,380/ 61

Total/ 166/ 12,880/ 78

1999

I/ 32/ 3,350/ 105

II/ 32/ 3,030/ 95

III/ 46/ 3,780/ 82

IV/ 39/ 4,220/ 108

Total/ 149/ 14,380/ 97

2000

I/ 31/ 3,620/ 117

II/ 39/ 7,030/ 180

III/ 40/ 5,740/ 144

IV/ 48/ 4,210/ 88

Total/ 158/ 20,600/ 130

2001

I/ 36/ 5,600/ 156

II/ 31/ 7,160/ 231

III/ 36/ 4,740/ 132

IV/ 29/ 1,560/ 54

Total/ 132/ 19,060/ 144

2002

I/ 25/ 3,140/ 126

II/ 26/ 4,790/ 184

Total/ 51/ 7,930/ 155

Source: KPMG Corporate Finance, 3 July 2002

Table 3: Top ten UK MBO/MBI/IBOs QII 2002

Name (£m)/ Value (£m)

Southern Water/ 2,050

NCP/ 820

Saville Gordon Estates/ 499

Priory Healthcare/ 371

Westminster Health Care/ 267

Clinical Trial Services/ 130

Open+Direct Group/ 129

Interfloor Group (Duralay & Tredaire)/ 63

Ethel Austin/ 55

Endsleigh Insurance Services/ 51

Source: KPMG Corporate Finance, 3 July 2002

Table 4: Larger public to private MBOsYear/ Number/ Value (£m)/ Average value (£m)

1997/ 4/ 284/ 71

1998/ 24/ 2,922/ 122

Total/ 28/ 3,206/ 115

1999 (by quarter)

I/ 5/ 1,133/ 227

II/ 12/ 1,211/ 101

III/ 11/ 1,775/ 161

IV/ 6/ 892/ 149

Total/ 34/ 5,011/ 147

2000

I/ 11/ 1,343/ 122

II/ 7/ 5,455/ 779

III/ 8/ 483/ 60

IV/ 9/ 1,657/ 184

Total/ 35/ 8,938/ 255

2001

I/ 9/ 2,035/ 226

II/ 9/ 2,465/ 274

III/ 8/ 1,550/ 194

IV/ 2/ 206/ 103

Total/ 28/ 6,256/ 223

2002

I/ 3/ 108/ 36

II*/ 1/ 499/ 499

Total/ 4/ 607/ 152

* Excludes 4 PTPs still pending as of 30th June 2002: Brake Bros plc, £434m; Esporta plc, £133m; Kunick plc, £114m; FCX International plc, £65m

Qualification: Larger UK MBO/MBI/IBOs are those with total funding of over £10m

Source: KPMG Corporate Finance, 3 July 2002