Private equity buyout activity in the West Midlands dropped in the first half of 2012 compared to the same period last year, according to a new report.
The overall UK market was more resilient, with 103 transactions totalling £8 billion in the first six months, showing a 38 per cent increase on the £5.8 billion in the second half of 2011, according to the Centre for Management Buyout Research.
The West Midlands recorded just five deals, with a combined value of £165 million compared to nine deals worth £898 million in the first half of 2011.
London recorded the most deals in the first half of 2012 with 30.
Phil Griesbach, director at the Birmingham office of Equistone Partners Europe, said: “Although the West Midlands has performed less strongly than in the same period last year, the deal pipeline is looking pretty active and when combined when the availability of finance for transactions, we should see an increase.
“However, macro-economic uncertainties continue to make forecasting difficult.”
Nationally buyout activity declined in the second quarter after a strong start to the year with 66 deals worth £5.4 billion in quarter one reducing to 37 deals worth £2.6 billion in quarter two – the lowest quarterly value since the final quarter of 2009.
The exit market appeared very strong with £5.5 billion of transactions so far this year, more than triple the total value in the second half of 2011.
Mark Stanway, M&A director at Ernst & Young in Birmingham, said: “While there have been fewer deals in the West Midlands, we do expect to see greater activity as the year progresses.
“It is positive to see private equity contributing a high percentage to the UK’s overall M&A activity in terms of value and volume.
“Although activity is showing signs of improvement, it is all relative, and there is still only a low volume of quality assets coming to market which is hindering activity in the UK.”
Christiian Marriott, director at Equistone Partners Europe, said: “The UK private equity market has shown robust performance in the first half of 2012, though a decline in buyouts in the past few months indicates that confidence is fragile, especially for larger transactions.
“It is encouraging to see an increase in buyouts of companies out of insolvency, demonstrating the positive role that private equity can play in rescuing high profile retail brands such as Game Group from collapse.
“We may see an uplift in buyouts towards the end of the year if macroeconomic uncertainties are resolved and as availability of financing for transactions continues to improve, indicated by a promising pipeline for the rest of the year.”