20 September 2011

South America becomes popular with European private equity backed companies pursuing buy & build strategies

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 second quarter of 2011 are presented below.

Headline Findings

  1. The number and size of add-on deals made outside of Europe, particularly in South America, in the quarter stands out. Given the relatively modest current prospects for economic growth in Europe it is no surprise that European private equity backed companies have decided to acquire in other regions. This trend also illustrates private equity's ability to support such transactions.
  2. The second quarter of 2011 saw overall volumes of add-on transactions remain at a similar level to the first quarter of 2011, with 77 add-on acquisitions made (versus 90 in Q1 2011). The average value of build deals for which a price was disclosed showed a fall in the second quarter (£60 million in Q2 2011 versus £110 million in Q1 2011), however a number of sizeable add-on acquisitions were still made.


Commenting on the findings, Neil MacDougall, Managing Partner of Silverfleet Capital said: "During the second quarter of 2011 private equity-backed companies were clearly able to obtain financing packages for the right add-on deals, and this has sustained the level of buy-and-build activity. As one of our portfolio companies recently had a close look at a potential acquisition in São Paulo, we were not at all surprised to see Brazilian and Colombian companies featuring prominently as targets, as other private equity investors also search for growth"

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