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SL Capital report sees continued growth in European private equity transaction value and deal sizes

The number of European private equity backed deals rose by 10% in Q4 2014, from the 334 transactions seen in the previous three months to 366 transactions, according to SL Capital Partners.

The firm’s Private Equity Barometer for 2014 reveals that combined deal value also staged a recovery, rising by 19.

At EUR73m, the average deal value in the fourth quarter was 9% higher than that of the previous quarter and only 4% lower than the peak recorded during the last ten quarters (in Q2 2013).

Deal numbers rose to 137 in the fourth quarter, an increase of four from the 133 deals completed in the third quarter, and registered the second highest total seen over the last ten quarters.

Aggregated value increased markedly – rising by 19% from the previous quarter’s total of EUR20bn, to EUR23.7bn.

Core mid-market value segment (EUR100m-EUR1bn) was responsible for three of the four additional buyouts in the fourth quarter, up from 41 to 44 deals.

The DACH region recorded the most pronounced rise in deal numbers – up 62%, from 13 to 31 deals. Total deal value nearly quadrupled from EUR1.8bn to EUR7bn.

At a regional level, one of the strongest trends seen over the course of 2014 has been the sharp uptick in deal activity in Southern European markets. Annual deal flow jumped 74% in terms of volume (from 34 to 59 buyouts)and 38% in terms of value from EUR5.4bn to EUR7.5bn.

Peter McKellar, Senior Managing Partner of SL Capital Partners, says: “We have now experienced three years of continued growth in European private equity transaction value and average deal sizes increased in 2014 as private equity funds sought to back established and stable businesses that have prospered since the financial crisis.  The mid-market continues its leading role as the engine room of Europe and now operates at its highest activity level since 2007, in both volume and value.  Southern Europe presents a recovery opportunity and significant private equity capital is flowing to those markets. Caution is, as ever, required as these markets have volatile prospects and a reputation for disappointing long term returns. Investors need to remain highly selective in targeting opportunities in the region.”

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