Quarterly data published by Silverfleet Capital, a European private equity firm that specialises in buy and build, suggests the number of buy and build transactions completed by private equity backed companies across Europe during first three quarters of 2010 was up almost one third (32 per cent) on the same period in 2009.
The research, produced in conjunction with mergermarket, reveals that there has been a modest but sustained increase in buy and build during 2010 – activity which had slumped dramatically in recent years, with the number of buy and builds completed in 2009 down 48 per cent on 2008.
When compared with European mid-market M&A data for the same period the improvement is broadly in line with overall trends in M&A volumes.
A more detailed analysis of the data shows, however, that compared to earlier vintages, the 2007 and 2008 buyouts have been particularly inactive in pursuing buy and build strategies in 2009 and 2010.
Neil MacDougall, managing partner of Silverfleet Capital, says: “We surmise that the high prices paid for 2007 and 2008 buyouts and the high levels of leverage used to finance them have prevented these companies from pursuing further buy and build deals even if the economic environment and M&A market has improved.
“It is likely that the 2007 and 2008 vintages will remain relatively inactive. Since very few platform deals were closed in 2009, we do not expect to see a further pick up in the level of buy and build activity until the 2010 and later vintages of buyouts start to have a bigger impact on these statistics.”
