Buyout values soar in first half of 2010

The overall value of buyouts in the West Midlands for the first half of 2010 has already far exceeded last year’s whole-year figures, according to new research.

In the region, the five deals recorded in the first half of the year had a combined value of £281.7 million whereas the whole of 2009 saw 10 deals with a combined value of £82.3 million.

Nationally, the overall value of UK buyouts in the first half of 2010 has already overtaken the 2009 full-year transaction value by 45 per cent, reaching £8.1 billion compared to £5.6 billion.

The figures come from the latest provisional data published by the Nottingham-based Centre for Management Buyout Research (CMBOR) and sponsored by Barclays Private Equity.

The Midlands (East and West) region was the third most active in the country, recording a total of 13 deals in the first half of the year compared with 19 in the south east and 14 in London.

Paul Harper, investment director at the Midlands office of Barclays Private Equity, said there had been a strong start to the year although activity had reduced in the second quarter.

“The value of private equity-backed buyouts in the second quarter is just over half the value in the first quarter, driven by a range of factors that delayed timetables and created uncertainty in the buyout market,” he said.

“With the looming general election and uncertainty around capital gains tax, it is not surprising that the momentum in UK buyouts waned in the second quarter.  Overall though, the trends on 2009 look encouraging.

“The exit market started the year strongly – driven by a number of sizeable secondary buyouts - but has also quietened down in the second quarter. 

“A number of large flotations were anticipated this year but renewed stock market turbulence has held back the IPO market, with only two private equity-backed IPOs taking place so far. 

“We may however see a gradual increase of sizeable flotations in the second half of 2010, particularly where firms are willing to reduce debt levels before or after IPO, with some potentially well received listings in the pipeline.”