UK Buyouts Low

UK Buyouts Hit 25 Year Low With Little Debt for Deals

Buyouts in the UK have been struggling for the past 25 years, according to a new study, and the financial crisis has made it even harder to execute deals.  The value of buyouts in the UK fell to 72% in 2009 which is a 25-year low.  The most likely cause for this decline is that there is very little debt available to fund deals in the UK and sellers are unwilling to lower prices to meet buyers’ offers.  Deal value in 2009 was roughly $3.36 billion, a massive decline from just over $12 billion the previous year.  In terms of volume and value of the private equity buyouts, it is nearly the worst in 25 years at 117 deals and $2.8 billion, respectively. 

Meanwhile the volume and value of private equity-backed buyouts at 117 deals and GBP4.7 billion respectively were also the worst for a quarter of a century.

Large buyouts which require higher multiples of debt were the hardest hit and private equity buyers were forced to stump up significantly higher amounts of cash to fund acquisitions–the average equity contribution rose to 64% in 2009, from 48%, said CMBOR.

However there is evidence that confidence is returning to the buyout market as the value of buyouts backed by private equity firms in the fourth-quarter of 2009 rose 48% to GBP843 million, from GBP636 million the previous quarter, it added.

Further, confidence is also returning to public markets and a slew of initial public offerings by private equity-owned companies are coming to market including Blackstone Group’s (BX) Travelport which earlier Tuesday confirmed plans to float its shares on the London Stock Exchange in a transaction valuing it at around $3 billion, London’s largest IPO in nearly two years.  Source

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Tags: UK Buyouts Low, private equity in united kingdom, uk buyouts, uk debt, debt to equity, private equity firms in the uk, united kingdom private equity firms

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