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Private equity investors bullish about UK media sector for next 12 months

Two thirds (64 per cent) of private equity investors expect to see activity levels increase in the UK media sector over  the next 12 months, according to research from financial and business advisers Grant Thornton UK.

The report, Where is the smart money going in media?, which canvasses the views of private equity investors backing UK media companies, reveals a high level of optimism over expectations of overall private equity activity in the UK media sector.

Only ten per cent expect PE activity levels to fall over the next 12 months while 23 per cent expect levels to remain the same.

Mirroring the positive sentiment, the majority of PE respondents (90 per cent) plan to make further investments in the UK media sector during the next 12 months. 

In terms of deal size, over half (54 per cent) expect to witness the bulk of PE deals taking place in the GBP16m to GBP100m deal size range over the next 12 months. Thirty three per cent expect the majority of deals to be less than GBP15m and ten per cent between GBP101m and GBP250m.

Dominic Bolton, media corporate finance partner at Grant Thornton, says: "M&A activity in the UK’s media sector declined sharply during the recession, with deal values down 75 per cent in 2009 but, reflecting the trends in the wider market, the first three quarters of 2010 have seen a much stronger appetite for deal-making.

"Activity in the private equity community mirrored the overall sector during the downturn, with a 41 per cent decline in deal volume during 2009 with only ten deals taking place, and a 78 per cent decline in value to GBP118m. 2010 has seen an increased level of activity, with 12 deals announced by the end of quarter three with an aggregate value of GBP322m."

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