Add-on activity in Europe has remained at the subdued levels seen in quarter one 2012 and below even the weak second half of 2011, according to Buy & Build Monitor for Q2 2012 published by Silverfleet Capital in conjunction with mergermarket.
The volume of buy and build activity in Europe in Q2 2012 remained broadly flat at the level seen in Q1 2012, with 63 add-ons completed in both quarters, and this level was the lowest of any quarter since the nadir in mid-2009.
However, the average disclosed value of add-ons rose to GBP45m, up 72 per cent from a very modest average disclosed value of GBP26m in Q1 2012 but still significantly lower than for example the average of GBP70m seen in Q3 2011.
Neil MacDougall, managing partner of Silverfleet Capital, says: “The lower level of buy and build activity that we have observed since the real onset of the Eurozone sovereign debt crisis in mid 2011 continued through Q2 2012 with overall activity still very subdued and only slightly above the trough seen in mid-2009.
“However, since the ECB’s LTROs we continue to see renewed interest in LBOs from a broader range of lenders especially in France and Germany. It is therefore no co-incidence that Q2 2012 saw a notable resurgence of buy and build activity in France especially by French acquirers who completed 10 out of the 13 add-on transactions in that country.
“However, in overall terms it is likely that weakening demand and confidence in both domestic and foreign markets is the main explanation for continuing lacklustre buy and build activity in Europe.”
During the second quarter of 2012 the reduced buy and build activity seen in the first quarter continued. The number of add-ons remained flat at the Q1 2012 level of 63, below the weak Q3 and Q4 2011 add-on levels of 84 and 86 respectively, and the lowest level since Q3 2009, when a mere 51 add-on acquisitions were completed. Meanwhile, the average disclosed add-on value in Q2 2012 rebounded from the first quarter, rising to GBP45m (versus GBP26m), albeit this average value is based on a small number of deals and is still at the lower end of the historic range.
