The West Midland private equity buyout market faltered in the first quarter of 2011 in terms of buyout values, mirroring a national trend.
But despite the slow start, experts in Birmingham have predicted that deal flow will pick up as the year continues.
The region recorded six deals in the first quarter compared to 11 in the whole of 2010.
Those deals totalled a value of £57 million compared to £800 million for the whole of 2010, according to figures released by the Centre for Management Buyout Research (CMBOR), cofunded by Barclays Private Equity and Ernst & Young.
On a national level in the first quarter of 2011 there were 40 buyouts/buyins with a total value of £3.2 billion compared to 181 deals in the whole of 2010 with a value of £18.5 billion.
Some regions, including the East Midlands, did not record any deals during the first quarter of 2011.
The figures also follow the European buyout market scene which slowed in the first quarter after a surge in the final quarter of 2010.
Paul Harper, investment director of Barclays Private Equity in Birmingham, said the buyout market was becoming more active.
He said: “The number of deals during the first quarter of 2011 is down on the previous quarter but that is not surprising following the large number of buyouts completed in the last quarter of 2010.
“The good news is that the buyout market is becoming more active across all deal sizes and there is certainly a greater level of early stage deal activity, an indicator that deal flow should increase in the next quarter as private equity firms seek to both invest and realise assets.”
The research found that secondary buyouts were the dominant source of all UK management buyouts/buyins.
Eleven secondary buy-outs were recorded during the first quarter – compared to nine from family and private and a further nine from local parent companies.
The most active sectors were business and support services, with nine deals, followed by manufacturing, with seven.
Nationally, there were 31 exits during the first quarter of 2011 compared to 36 in the last quarter of 2010.
Of these, 13 were by trade sale, 11 by secondary buy-out and seven through creditors’ exit.
Mr Harper added: “There is still some caution in the market but despite the low figures for the first quarter, most commentators believe that the number of deals will pick up as we go through the year and it is thought that 2011 will overall be more active than 2010 which in itself showed an increase on 2009.”
