23 November 2011

Private Equity: A driving force behind European integration

The conclusions from a detailed analysis by Silverfleet Capital, in conjunction with mergermarket, of buy & build activity for European private-equity backed companies during the third quarter of 2011 are presented below.

Headline Findings

  1. In contrast to the second quarter of 2011, European buy & build activity in the third quarter was mostly focused on Europe and the USA with almost no add-ons being done in South America or Asia. Deals in the quarter included Saga’s purchase of Allied Healthcare, Tunstall’s acquisition of American Medical Alert Corp., Photobox’s tie up with Moonpig, Brenntag’s takeover of Multisol, Tarkett buying up Parquets Marty and Kiloutou taking over Groupe AltéAd.
  2. However, the third quarter of 2011 saw only 67 add-on transactions, a relatively low number when compared to the 103 add-ons completed in Q2 2011 and the 94 done in Q1.
  3. The majority of add-ons, 66% of the total in the quarter, were domestic or regional deals. Almost 25% of the total were add-ons of businesses located elsewhere in Europe and the remaining transactions were purchases by European platform companies of businesses outside of Europe.


Commenting on the findings, Neil MacDougall, Managing Partner of Silverfleet Capital said:

“During the third quarter of 2011 private equity-backed companies were less active in terms of add-on deals, possibly reflecting the increase in economic and financial uncertainty and the disproportionate impact this can have on companies with leveraged balance sheets.”

“However, yet again almost a quarter of the add-ons were deals where European companies made acquisitions not in their own domestic or regional market but of firms operating elsewhere in Europe. Our analysis of buy & build data going back over ten years shows that this has been a remarkably consistent feature of buy & build activity and is clear evidence that private equity is driving greater integration between businesses across Europe.”

“Earlier this year we sold our investment in European Dental Partners. EDP was a build-up in the dental consumables sector consisting of five acquisitions made by a platform German company across Central & Eastern Europe. EDP is a good example of private equity driving greater integration of European businesses. The company was in turn acquired by Lifco Dental International, the leader in the sector in the Nordic Region”.

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