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Northern private equity confidence survey 2010

Cautious optimism

Northern Private Equity Confidence Survey 2010 - Cautious Optimism

Deloitte launches 3rd annual Northern private equity confidence survey

Background

Last year M&A market conditions were some of the toughest we’ve seen in recent years. However, with the economy now showing tentative signs of recovery, the Northern private equity community is feeling cautiously optimistic about what 2010 will bring. How long will it take for a recovery to be established? Should we expect a market uptick in deal activity in the North? How will Northern debt funders respond in terms of quantum and pricing?

In an attempt to answer these questions and gauge current confidence levels, Deloitte has surveyed over one hundred leading professional in the 3rd Northern Private Equity Confidence Survey. A sample of private equity investors, bankers and lawyers from the North East and North West responded to a series of key questions, providing a valuable insight into how views differ between the Northern regions.

Key findings

  • The number of opportunities considered, deals completed and average deal size fell sharply during 2009 compared with the previous year
  • 2009 was still dominated by activity in family owned/private businesses and subsidiaries of groups as in 2008. Perhaps surprisingly, only 15% of the opportunities considered by our respondents were considered to be in ‘stressed’ circumstances
  • All the respondents expect deal volumes and conversion rates to at least remain the same in 2010 and 97% expect prices to rise or at least remain stable
  • 83% of bankers expect senior debt margins to be between 400 and 450 bps, compared to only 33% of VCs and all expect debt multiples to be between 2.5x and 3.5x EBITDA
  • Top sectors for deals in 2010, as in 2009, are manufacturing, healthcare and technology, media and telecommunications, with respondents seeing retail coming back into favour
  • 80% expect investors to be net buyers this year
  • 56% expect recovery to be established in 18 months or longer and 69% of respondents expect a change in government this year to have little or no effect on transactions volumes
  • As last year, the North East is generally more bullish on the overall climate and more optimistic on both deal volumes and average deal size
  • However in a turnaround from last year’s results, private equity investors are the most optimistic with bankers being the most bearish about economic recovery

Request a hard copy of Northern Private Equity Confidence Survey 2010 - Cautious Optimism Request a hard copy of Northern private equity confidence survey 2010 (limited availability).

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