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Corporates driving the private equity exit market

Following recent research from global investment banking group Baird, which showed that H1 2011 deals involving private equity firms had risen by 91.6% in value terms over H1 2010, further evidence of rising activity is emerging, says David Silver, Managing Director of Baird…

The trend is driven by the twin factors of buyout houses needing to realise profitable investments at attractive valuations, and corporates with healthy balance sheets looking to pursue growth opportunities after years of inactivity.
 
Baird has advised on five deals over the summer:

Kiwa, a certification company with inspection and lab operations, as well as training, technology and data services, sold by ABN AMRO Participaties to NPM Capital.

Tag, an international provider of marketing execution and production services, sold to Williams Lea.

Stromag Holding GmbH, a market leading engineer of industrial power management components with a strong technology base, was sold by Equita Management to GKN plc.

VAG Armaturen, a German valve manufacturer in the water and wastewater market, sold by Halder to US industrial company Rexnord.

Stark Verlag, a Freising-based publisher of education materials and test preparation resources for pupils and teachers, sold by Syntegra Capital to learning specialist Pearson.

Four of these deals – Tag, Stromag, VAG and Stark– were owned or part-owned by private equity and sold to trade buyers, highlighting the continued strength of corporates’ balance sheets despite wider economic uncertainty. Private equity firms, meanwhile, are being outbid as difficulties raising debt to finance acquisitions reduces their competitiveness.
 
With few corporates having acquired during the downturn, and now needing to achieve earnings growth to beat inflationary pressures, combined with private equity’s growing fundraising pipeline, further deals are expected over the coming months.

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