Private equity deals polarise

PRIVATE equity deals have become polarised in the first six months of the year, according to accountants and business advisors Grant Thornton.

The firm has seen only limited activity in the £25m to £100m sector of the market in contrast with a large number of very high value deals including the Advent buy out of sofa firm DFS, the Charterhouse buy out of Card Factory and the buy out of Republic by TPG.

Activity in the sub £25m deals market has also been bolstered by bolt-ons to private equity portfolio companies rather than classical buy out transactions.

Will Oxley, partner and head of transaction advisory services at Grant Thornton in Leeds, said: “In the historically vibrant £25m to £100m range of the Yorkshire deals market, there has been less activity than usual with most of the action taking place in the under £25m and over £100m market.

“This polarisation of the transaction market in the region, which is likely to have been caused by several factors such as the uncertainty over the new Government and its fiscal and financial directions, has continued macro economic fragility and the ability of larger private equity houses to write large equity cheques without the need to immediately secure bank funding.

“The second half of 2010 will remain challenging for the transactional market although activity should start to increase towards the end of the year.”