01 December 2010
Buy and Build activity on the Rise
Quarterly data (Q3 2010) published today by Silverfleet Capital, the European private equity firm that specialises in buy & build, shows that the number of buy & build transactions completed by private equity backed companies across Europe during first three quarters of 2010 was up almost one third (32 per cent) on the same period in 2009.
The research, produced in conjunction with mergermarket, reveals that there has been a modest but sustained increase in buy & build during 2010 – activity which had slumped dramatically in recent years, with the number of buy & builds completed in 2009 down 48 per cent on 2008. When compared with European mid-market M&A data for the same period the improvement is broadly in line with overall trends in M&A volumes.
A more detailed analysis of the data shows, however, that compared to earlier vintages, the 2007 and 2008 buyouts have been particularly inactive in pursuing buy & build strategies in 2009 and 2010.
Commenting on this information, Neil MacDougall, Managing Partner of Silverfleet Capital said: “We surmise that the high prices paid for 2007 and 2008 buyouts and the high levels of leverage used to finance them have prevented these companies from pursuing further buy & build deals even if the economic environment and M&A market has improved.
“It is likely that the 2007 and 2008 vintages will remain relatively inactive. Since very few platform deals were closed in 2009, we do not expect to see a further pick up in the level of buy & build activity until the 2010 and later vintages of buyouts start to have a bigger impact on these statistics.”
Silverfleet Capital has been an active European mid-market private equity investor for more than twenty years. The firm works actively with the management teams of their investee companies to realise buy & build strategies. Histoire d’Or, France’s leading independent jewellery retailer, is a good example of this approach, having made three acquisitions as well opening new stores to expand its retail footprint by over 60% prior to its recent sale.