UK buyout activity falls 73%

First quarter deal activity reflects a ‘UK buyout market showing little sign of life’, according to recent data that shows just £2bn has been invested so far this year, compared with £7.5bn in the first quarter 2008.

The UK’s buyout market saw £2 billion (€2.1 billion ;$2.9 billion)in activity during the first quarter 2009, a dramatic 73 percent decline from the £7.5 billion invested in the same quarter last year, according to the Centre for Management Buyout Research (CMBOR).

The data revealed that that of the £2 billion invested, two-thirds came from just one deal, the £1.25 billion buyout of an on demand television company NDS Group, by Permira in January. Only five deals worth more than £100 million were agreed in the past three months.

Meanwhile, deal volume dropped by 59 percent to 61 deals done in the first quarter, down from 152 agreed in the same period last year. Secondary buyouts only accounted for 7 percent of all deals done, down from its 12 percent share last year. And the low- to mid- market segment, defined as between £10 million and £100 million, recorded just eight deals, down from 38 during the first quarter of 2008.

“We are witnessing a market showing little sign of life…It seems the only willing sellers in this market are the public markets,” Christiian Marriott, a director at Barclays Private Equity, said in a statement. Barclays co-commissioned the research with Nottingham University.

He said this was a “very quiet” start to 2009, and noted exits have also declined. Just 30 exits worth £221 million have been achieved so far in 2009, compared to 324 exits worth £9.8 billion in the first quarter 2008.

Investment this year, however, has shown an increase of 45 percent from the 13-year low recorded in the final quarter of 2008. Marriott said the market is unlikely to see much recovery in the next quarter, but is expected to stabilise at a lower level throughout this year.