Average P/E ratios for UK public to private (PTP) deals were lower than for the UK buyout market as a whole last year, according to research conducted by the Centre for Management Buyout Research (CMBOR). CMBOR also found that the average UK PTP bid premium fell by over a third during 2000 to 29.8 per cent. Interestingly the bid premium had been on the increase for three years in succession prior to last year.
While PTP deals have been on the increase in the UK exit levels from PTP’s are not keeping pace with those achieved by the rest of the UK buyout market. Only seven of the 123 PTP deals completed since 1997 have achieved an exit to date. That represents an exit rate of 5.7 per cent for PTP’s as opposed to 9.6 per cent for the total buyout market.
Illustrating a tightening in the debt market it was found that the average amount of debt in all buyout deal structures fell to 42 per cent compared to 47 per cent in 1999. The well milked mid market buyouts saw average entry P/E ratios for deals in the GBP5 million to GBP100 million range increase.