Deals hit five year low
THE value of North West private equity deals has dropped to its lowest level since 2003, according to research out today.
Deals value was just £1.8bn in 2008, compared with £2.6bn in 2007 and £2.3bn in 2006, the Centre for Management Buy-out Research said. The last time the total deal value in the region was lower – in 2003 – it stood at £851m.
Despite this, the number of deals increased to 94 from 83 in 2007, fuelled by changes to capital gains tax in the first quarter, giving 2008 the second highest number of deals in the last ten years.
Family and private deals were the largest source of buy-outs and buy-ins for the fourth year running, with a total of 40 deals in 2008. Secondary buy-outs had the highest value of deals at £536m in 2008, despite accounting for just 11 deals.
“Whilst banks and private equity houses may be taking a more cautious approach towards larger transactions due to worsening economic conditions, they realise there are still deals to be done albeit on a smaller scale,” said John Walker, director of Barclays Private Equity in Manchester.
The manufacturing sector saw the most activity with 33 deals, followed by business and support services at 14 deals and healthcare with ten deals.
Despite the overall annual decline, the value of deals in the final quarter of 2008 showed improvement on the previous two quarters, reaching £525m, compared with £258m in quarter three and £385m in quarter two.
Mr Walker added: “It is difficult to say where the market in the North West goes from here. In the short-term, uncertainty in world financial markets looks set to continue. However, should business sentiment start to return in reaction to government intervention then deal flow should increase as we move through the first half of the year.”
