Midlands management buy-outs plummet in 2008
Mar 25 2009 by Tom Scotney, Birmingham Post
Management buy-outs in the West Midlands dropped sharply in both number and value over the last year, figures from The Centre for Management Buy-Out Research have revealed.
As van-maker LDV struggled to arrange an MBO it says is the way to save the company, the centre said just 48 deals were recorded in the region during 2008 compared with 67 in 2007, with the total deal value falling from £2 billion in 2007 to £705m in 2008.
Figures from CMBOR, supported by Barclays Private Equity and based at Nottingham University Business School, reveal the Midlands had one of the rockiest rides in recent years – with the deals recorded in the first quarter scraping along the bottom at around £100m before soaring in the third quarter to nearly £1.6 billion, but falling again to very subdued levels at the end of the year. Phil Griesbach, director of Barclays Private Equity in Birmingham, said: “At the start of 2008, everyone was forecasting an interesting year – and we certainly got that.
“Both deal numbers and the value of those deals were down. In the £100m-plus market, the Midlands only had four deals in 2008 – compared to eight in 2007. In the sub £10m market, where the majority of deals are not private equity backed, the trend was similar: a fall from 96 in 2007 to 64 in 2008.
Manufacturing is the most active sector in the Midlands although there were only 27 deals in 2008. That was followed by the support services sector where 14 deals were recorded last year. The food and drink sector came in with the highest value at £1.1 billion – but virtually all of that was from one deal, Foodvest.
Mr Griesbach added: “The difficulty is now forecasting how 2009 will turn out. Certainly, the first quarter will be extremely quiet but there are deals in the pipeline and as markets try to stabilise and pricing becomes more attractive to investors, it is quite likely we will see an increase – but probably not a surge – of activity as the year goes on.
“Many private equity houses still have significant funds to invest and are looking how to deploy their fire power in these uncertain times. The CMBOR figures reveal that fundraising during the past three years added a further £70bn to private equity spending power and investors want to see that money being sensibly put to use backing businesses. The trick is identifying which will grow – and which might go.”
