New data released today by CMBOR, the leading provider of analysis on the private equity market founded by Barclays Private Equity and Deloitte, reveals that exit value fell to £23.8 billion in 2007 – a significant reduction on the record £26.9 billion achieved in 2006.

Meanwhile exit volumes in 2007 actually increased, reaching a record 400 compared to 335 in the previous year.  The average exit value in 2007 was £59.3 million compared to £80.2 million in the previous year.

2007 was undoubtedly the year of the secondary buy-out.  Secondaries reached a record £14.4 billion in value from 124 transactions, nearly double the £8.0 billion recorded in 2006.  Secondary buy-outs now account for over half of all exits by value.

After the dramatic slowdown in the market for new buyouts in Q4 2007, it is likely that secondaries will give way to trade sales in 2008.  Last year was a strong year for trade sales in terms of volume, increasing to 156 from 143 in 2006, but with total value almost half the 2006 figure.  

The number of flotations fell in 2007 to their lowest level since 2002. There were just 14 flotations last year compared to 21 in 2006. This was just slightly up on the 13 flotations achieved in 2002.   The largest buyout IPO of the year was Safestore, which floated in March with a total value of £449m.

Tom Lamb, Co-Head of Barclays Private Equity explained: “UK exits have been so dominated by secondary deals that the slowdown in the new deal market is clearly having an effect on activity.  We will wait to see if the trader buyers who have been so active in smaller deals will make a serious return to form at the larger end of the market.”

Mark Pacitti, Corporate Finance Partner at Deloitte said: “2007 saw 25 deals exit for more than £250 million each. However, after 16 exits in the first half, we recorded just nine in the second half as the credit crunch started to bite. It is also notable that 60% of these larger exits were secondary deals. The credit crunch not only hampers new investing activity but also makes it harder for private equity investors to realise the value they have created.”

Other highlights from today’s data include:

• After several years in which total exit activity has tracked the levels of activity in the buy-out market, in 2007 the decline in total exit value contrasted sharply with new deal value, which shot up to £45.6 billion.
• The credit crunch made IPOs a much less credible route for exit in the final quarter of last year. There were only 14 former buy-outs going public in 2007 with a combined value of £2.2 billion. This is compared to 21 IPOs in 2006 worth £5.5 billion.
• The average time to exit for the whole market continued to rise in 2007. Last year saw the average investment period settle at 64 months, compared to around 45 months in the late 1980s.

Download our full press release Secondary exit boom gives way to uncertainty as 2007 falls short of last year's highs (PDF, 263KB) for supporting tables and graphs

Ends

Notes to Editors
The Centre for Management Buy-0ut 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 independent robust analysis of the Buy-Out market.