West Midlands sees fall in MBOs as 2013 UK trend shows fall in volume and value
THE UK’s private equity buyout market has seen a drop in both volume and value of deals at the half way point of 2013, but exit values have increased significantly boosted by the revival of PE-backed IPOs as an exit route for the industry, a new study claims.
There were 81 UK buyouts during the first six months of this year with a total value of £6bn, compared to 117 and £8.6bn over the same period in 2012. The value of exits totalled £8bn at the half way point of this year, an increase from £5.8bn in 2012, according to the latest data published by the Centre for Management Buyout Research (CMBOR) at Imperial College. The study is sponsored by the newly-rebranded EY (Ernst & Young) and Equistone Partners Europe.
The West Midlands got off to a slow start, especially by comparison with the North West. During Q2 there were three completed MBOs in the West Midlands, which followed none during Q1. This compares with a total of seven buyouts during the first two quarters of 2012.
The three completed deals in 2013 were worth a combined £22m. This compares with a value of £265m for the seven deals completed during the same period last year.
The largest MBO so far this year was of Rivo Software, a company which develops computer software. The deal was worth £20m and completed during the second quarter of 2013.
The North West is most active region by deal volume, with 16 deals at £1.3bn followed by London with 11 deals (£1.4bn).
John Houlden, Transaction Support Partner for EY in the Midlands said: “The West Midlands has seen a slow start to the year with just three deals completed out of the 81 overall in the UK in the first six months of 2013. However, these low levels of buyout activity are not reflective of what we are seeing in the market place in terms of the pipeline and deals in progress, so we do expect to see a pick-up in activity towards the end of the year.”
Paul Harper, Investment Director at the Birmingham office of Equistone Partners Europe, said: “The regional deals market seems busier than these figures would seem to indicate. Those deals that have been completed are at the smaller end but are nonetheless indicative of a general pick up. Larger deals are tending to take longer to come to fruition but the deal pipeline is looking positive.
“It’s interesting that the North West has this time around been the most active region in the buy-out market – a position normally held by London or the South East. Perhaps this is an indication that the regional UK economy is beginning to show signs of recovery beyond the South East corner.”
EY announced its rebranding today to coincide with the arrival of Mark Weinberger as its new chairman and chief executive.
The 51-year-old American has previously served as the global and Americas head of tax and has been a senior advisory partner for many of the firm’s largest clients.
He was also assistant secretary to the US Treasury, focusing on tax policy, under President George W. Bush and he was appointed to the US Social Security Advisory Board by President Clinton.
