After the record £9.3 billion of deals completed in the final quarter of 2006, completions for the UK private equity market have dramatically slowed in the first quarter of 2007, with only £3.4 billion in buyouts completed; the lowest quarter for three years according to CMBOR, the pre-eminent provider of analysis on the UK buy-out market founded by Barclays Private Equity and Deloitte.

Tom Lamb, co-head of Barclays Private Equity, commented: “It is astonishing to see how little private equity completions there has actually been in the first quarter given the frenzy of press coverage surrounding a succession of high profile 'take-private' candidates such as Sainsbury’s, Alliance Boots, Pearson, Kingfisher, Whitbread, Compass, and Cadbury.  However, the slow down in the first quarter is not necessarily a reflection of the year to come, 2005 and 2006 showed a similar drop, both of which turned into record years. Such a strong end to the year as we saw in 2006 is bound to distort the first quarter of the following year, it is worth noting that much of the value of the final quarter was down to a few mega deals, including United Biscuits at £1.6 billion. It remains to be seen whether the private equity houses will actually pay a sufficient premium to allow some of these larger take privates to actually happen.”

Adrian Balcombe, Corporate Finance Partner at Deloitte, said: “While the low number of first quarter completions will surprise many in the industry, we are expecting the fervent activity we have seen since the New Year to come to fruition and complete in the next 3-6 months.  Less floats and the noticeable reduction in dual track processes shows that secondary and trade buyers are currently the preferred exit route.  The current healthy position of trade buyers and the ‘wall’ of money created by the 2006 record fundraisings are the key drivers behind this trend.  We are seeing some signs of restraint in the private market with deal multiples going down for mid-market deals.  However, multiples continue to rise for large deals suggesting that the total 2007 deal value could be blown out of the water by one or two high profile ‘mega’ deals.”
Q1 2007 highlights:

• Of the total value of completions, the proportion of public to privates has fallen significantly from the record high.  After a very slow start in 2006, the public to private market surged in the final quarter to reach £6 billion from 25 buy-outs. This year public to privates total just 6 with a value of just £513 million.

McCarthy & Stone was the largest public to private buy-out of 2006 at £1.1 billion. To date, Liverpool Football Club is the largest deal at £219 million.

• In 2007, 58 exits have been recorded to date at a value of £3.6 billion for Q1 2007.  A record exit value of £26.1 billion was reached in 2006 following £22 billion in 2005.  The largest exit this year is Cory Environmental sold to an infrastructure fund for £588 million.  Safestore floated in March 2007 for £449 million and is the only IPO to date.
• The largest sectors in 2007 so far are business support services, which has more than doubled last year’s value of £250m to £519m; technology, media and telecommunications, which has also doubled last year’s figures at £454m compared with £216m for 2006; and leisure, which looks set to continue as one of the leading sectors in 2006 with a value of £403m so far this year (£549m in 2006).
• Secondary buy-outs contributed a record 15 per cent by volume in 2006 and 19 per cent so far this year.
• UK owner-managed company divestments have been falling in percentage terms since 2000. In 2005 they constituted just over one fifth of market share by volume with activity remaining at this level in 2006 and 2007.

Notes to Editors:
The Centre for Management Buy-out Research (CMBOR) was founded by Barclays Private Equity and Deloitte at Nottingham University Business School in 1986. CMBOR is world-renowned as the long-standing leader in providing robust analysis of the buy-out market.