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EU assets targeted by US middle-market private equity firms

Recent European M&A processes have seen strong interest from purely US-based private equity (PE) firms, according to mid-market investment bank Robert W Baird & Co.

Some 44 middle-market leveraged buyout (LBO) transactions have been completed since 2011, where the final buyer was a purely US based PE firm, including:
 
• Chicago based GTCR’s acquisition of UK based Callcredit Information Group from Vitruvian Partners in February 2014 for GBP480m
 
• New York based New Mountain Capital’s acquisition of UK based Alexander Mann Solutions from Graphite Capital in October 2013 for GBP260m
 
• Washington, D.C. based Arlington Capital Partners’ acquisition of UK based MB Aerospace from Lloyds Development Capital (LDC) in April 2013
 
Baird believes that this trend is set to continue, particularly in the middle market where European PE firms are looking to exit their portfolio companies through global M&A sale processes. Key drivers for this growing trend include:
 
• An improving European macroeconomic environment
• Pressure on PE firms to deploy USD400bn of dry powder worldwide, the majority of which sits in the US
• Competitive and overcrowded PE environment in the US driving firms to look overseas
• Liquidity in the US and European debt markets is supporting buyouts of strong businesses
• Sector-driven PE firms keen to acquire assets outside of their primary geographic regions
• Leveraging US experience to accelerate growth of businesses headquartered in Europe with locations in the US.

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