European Buy & Build activity reached its highest level on record in 2017, with a total disclosed deal value of GBP7.8 billion, according to Silverfleet Capital’s European Buy & Build Monitor.
The most active region for add-ons was the UK & Ireland, despite the uncertainty caused by Brexit.
The Buy & Build Monitor, which tracks global add-on activity undertaken by European- headquartered companies backed by private equity, identified a provisional total of 619 add-ons in 2017, a 7.8 per cent increase on the 574 add-ons recorded in 2016.
The average disclosed value of add-ons in 2017 was GBP87 million, up from the 2016 average of GBP82 million. A total of 33 add-ons with values greater than GBP60 million or EUR70 million were announced in 2016, the highest number on record.
Silverfleet’s analysis of European add-on activity reveals that over a third of add-ons are completed in the first two years following the acquisition of a platform, suggesting that a number of these may have been under consideration even before the platform was formed. A quarter occur between the second and third anniversaries and by the fourth year over two-thirds of all add-ons have been completed.
The largest recorded private equity-backed add-on in 2017 was Bridgepoint-backed Element Materials Technology’s acquisition of global testing company Exova Group plc for GBP770 million. In H2 2017 the largest add-on was Permira-backed Lowell GFKL Group’s GBP646 million acquisition of credit management businesses from Lindorff Group AB and Intrum Justitia.
The UK & Ireland continued to lead the table with 123 deals followed by the Nordic region with 111 add-ons, sustaining the strong recovery it had made in 2016.
Both the DACH region and France were unexpectedly much weaker in 2017 with 57 and 56 add-ons, down 15 per cent and 25 per cent respectively on 2016. Offsetting this was the continued growth in activity in Italy (44 add-ons versus 35 in 2016) and a bounce-back in Spain and Portugal (34 add-ons versus 21 in 2016), a 62 per cent increase.
Add-on activity undertaken outside Europe accounted for 13.4 per cent of total volume with North America being the favourite target and over three times as active a region for European companies to buy into as Asia Pacific
Silverfleet’s buy & build activity in 2017 includes French specialty chemicals portfolio company Coventya’s acquisition of Borsa Istanbul-listed Politeknik and the add-on of Telbis, Coventya’s exclusive distributor of chemicals to the general metal finishing (“GMF”) market in Turkey.
Commenting on the findings, Neil MacDougall (pictured), Managing Partner of Silverfleet Capital said: “European Buy & Build activity reached its highest level since we started recording this data in 1998. With generally strong economic conditions in Europe, liquid financing markets and pressure on private equity firms to generate repeatable returns, the reasons for this are clear.”
“The speed at which add-ons are completed suggests that many have already been lined up before the platforms that make them have been acquired by their private equity owners.”
