European Buy & Build activity in 2015 reached its highest level since the first half of 2011, according to Silverfleet Capital’s annual European Buy & Build Monitor.
The Buy & Build Monitor, which tracks global add-on activity undertaken by European headquartered companies backed by private equity, identified a provisional total of 404 add-ons in 2015 compared to 393 in 20141.
In Q3 2015 there were 125 add-ons reported, the highest total recorded in a single quarter since Q2 2008 with 143 transactions. The average disclosed value of add-ons in 2015 was GBP40.5 million. The largest add-on by a considerable margin at USD830 million, was in the customer care outsourcing industry where Groupe Acticall, backed by Creadev – a private equity fund controlled by the Mulliez family – acquired major competitor, SITEL, which employs more than 60,000 people in over 100 centres across 21 countries.
Buy & Build activity in the UK and Ireland performed strongly in 2015 with 86 transactions, an increase of 5 per cent since 2014. The largest increase in Europe took place in Spain and Portugal, where the economic recovery resulted in 31 add-ons in 2015, over double the 2014 total of 15 and significantly up on the three year average.
The Nordic Region, usually however one of the most active areas in Europe, saw a 29 per cent fall in Buy & Build transactions in 2015 compared to 2014, possibly due to the economic headwinds currently facing Finland and Norway.
Add-on activity undertaken outside Europe fell back noticeably in North America and Asia Pacific (down 30 per cent and 27 per cent since 2014 respectively) but this appears to be a return to more normal levels. Nevertheless North America maintained its position as the favourite place in the rest of the world for add-ons by European companies.
In this year’s report Silverfleet looked in detail at the number of add-ons completed by each platform to see how these are distributed. In total 589 platforms were active in the three year period 2013-15 and these had made, by the end of 2015, 1,159 add-ons resulting in an average number of add-ons per platform of close to two. According to the report, 71 per cent of the add-ons completed over that period were completed by platforms that are classified as either ‘Active buyers’ or ‘Portfolio builders’, which are more likely to create shareholder value than ‘One-timers’.
Neil MacDougall, Managing Partner of Silverfleet Capital, says: “The continued recovery in Buy & Build activity levels, notably in Iberia but also in Italy is now clearly visible and more than offsets a weak year in the Nordic markets. The UK and Ireland was the most active region and seven of the 12 deals over GBP60 million were completed by UK-based platform companies. Our analysis of active platform companies starts to show why Buy & Build is so popular with private equity GPs and LPs and we expect this trend to continue over 2016.”
