European private equity activity strengthens but UK struggles to keep its crown
17 December 2018
CMBOR research shows PE-backed acquisitions in continental Europe hits highest level since 2007, with total value of €79.3bn.
4 min read
‘With typically high levels of organic growth and significant bolt-on M&A opportunities, conditions are ripe for TMT to continue to dominate UK and European deal-making in 2019.’
Sebastian Lawrence, Investec Investment Banking
the sector has claimed the biggest share of deals by value for each of the last three years.Support services, and in particular business services, will continue to be a mainstay of the UK buyout scene – the sector has claimed the biggest share of deals by value for each of the last three years. Opportunities created by disruptive technology and new regulation designed to prevent the major auditing companies providing conflicting services, will continue to bolster private equity interest.
Brexit is creating too much uncertainty to place a bet on the UK high street at the present time.Against this backdrop, private equity appetite in the sector has been muted, with just 9 buy-outs completing in 2018 with a total value of £444 million. Retail deals accounted for just 2.4% of all UK buy-outs by value in 2018, versus 13.7% four years ago. Across the whole of Europe, just 20 buy-outs were completed in the retail sector in 2018, accounting for only 1% of all European buy-outs versus 10% in 2015.
The restaurant sector, once one of the hottest sectors for private equity, is certainly out of favour, with oversupply and falling demand.The restaurant sector, once one of the hottest sectors for private equity, is certainly out of favour, with oversupply and falling demand, together with significant cost inflation, creating the worst trading conditions that many operators can remember in their lifetimes. Deals are still happening, but with a stronger focus on proven (but smaller) concepts with strong management teams that can demonstrate both roll-out potential and resilient LFL performance.