A total of 298 European private equity transactions in Q3 represented a meaningful reduction in volume over the prior quarter, impacted by a decrease in both buyouts and early stage transactions, according to SL Capital Partners.
Value held up relatively well given the reduced volumes and, although the EUR19.0bn transacted was a 19.7 per cent reduction on the prior quarter, the overall performance was much higher than Q3 2013 and 2012 and average deal size remained stable.
The European private equity market continues to move in a general upward trend, although continuing to experience a high level of volatility during the 12 month periods.
Following a strong performance in Q2 2014, the current period saw a step back in volumes and value, both reducing by around 25 per cent.
Overall buyout values held up compared to the extreme volatility experienced in the past three years. For 2014 to date, the 354 buyout deals completed worth EUR52.3bn represent an increase of 10 per cent and three per cent respectively.
Core mid-market transactions in the EUR100m to EUR1bn value segment remained stable, with 36 deals in Q3. There was a more significant reduction in the number of smaller deals sub EUR100m and with two less EUR1b+ deals, the total completed in the quarter was lower.
UK market remained active and in line with prior periods, however, activity in Germany and France demonstrated material reductions in volume and value, impacting the quarter as a whole. In Germany, deal volumes halved and volume was down by 90 per cent. Increased transaction volume and value in Benelux and the Nordics offset some of this.
Anecdotal information suggests that Q4 2014 should see a return to form for European markets and an increased level of activity in the buyout space across all size segments.
Peter McKellar, senior managing partner of SL Capital Partners, says: “We have experienced a number of quiet third quarters over the past couple of years and 2014 looks to have followed the same pattern. With the higher activity levels in Q2, it is perhaps not surprising that the autumn would see a pause in advance of the traditional push towards the year-end. While there has been an increased level of less bullish sentiment coming from the European countries, including Germany and France, there is a high level of ongoing activity and announced private equity deals so we expect the full-year performance of buyout markets will continue recent steady, if volatile, growth.”
