The number of UK buyouts completed each year has remained almost static since 1990 with the volume of private equity-backed deals decreasing over the last six years. Findings from the Centre for Management Buy-Out Research (CMBOR) suggest the UK private equity market has reached maturity, making conditions challenging for new entrants.
The data, sponsored by Deloitte and Barclays Private Equity shows that from 1979 to 1990, the volume of buyouts grew steadily from 20 deals to 604. There have since been limited fluctuations in annual deal numbers with 670 recorded last year.
Private equity-backed buyouts have been decreasing since 1997 when the 419 completed accounted for almost 60% of all deals. In 2003 only 32% of buyouts were private equity backed with 214 recorded, the lowest level for ten years.
The CMBOR research shows that debt levels in buyout financing rose further in 2003 averaging 51% of funding per deal. Equity accounted for 41% of finance. The figures also suggest that mezzanine usage in initial buyout fund structuring has not increased in recent years remaining at around 3%.
Mark Pacitti, private equity partner at Deloitte, said: “While annual buyout volume has been pretty stable in recent years, there has been huge growth in the average value of deals, from just over £5m in 1990 to a peal of £39m in 2000. Private equity houses are now focusing on larger, more lucrative transactions, with buyouts not involving private equity being primarily those in the sub £10m bracket.”