> Private Equity Barometer Q4 2010 – AltAssets

Posted on February 3, 2011 by



In good times the final quarter of any year is the busiest, with private equity managers keen to tie up deals before year end and the traditional extended break that characterises the season. These are not yet good times. While 2010 began optimistically as the recovery seemed to be defying expectations and gathering pace, it ended with renewed concerns over the macro-economy as the reality of Government austerity packages began to bite and the Eurozone struggled with a sovereign debt crisis that stubbornly refuses to subside.

Thus, the final three months of the year saw caution reign supreme again. Both the number and value of private equity-backed deals across Europe fell against the previous quarter by 7 per cent and 8 per cent as 230 transactions were recorded with a combined value of €22.2bn. In volume terms this was the second consecutive fall since the 299 deals that were recorded in a second quarter characterised by talk of a faster than expected economic bounce back, and the smallest total registered in the entire 18 month sample.

However, that 2010 has seen an improvement in market conditions is evidenced by comparing these numbers against the corresponding period in 2009, when there were 235 deals completed but collective value was over 50 per cent less at just €10.3bn. Debt is more freely available and, while the top end of the market has slowed slightly following an impressive showing in Q3, the buy-out sector generally appears in good health, with a hand-full of €1bn+ transactions completed and increases recorded in the core midmarket deal brackets. Full year numbers therefore showed strong growth, with 2010 up by 9 per cent and a whopping 143 per cent to 1,029 deals
worth €71.5bn.

Indeed, the declines witnessed in volume in the fourth quarter are largely due to subdued in the growth capital sector, which recorded the lowest number of deals for more than 18 months and the lowest value total since the final quarter of 2009. A lack of funding for growing businesses is usually evidence of an underlying cautious mood, a difficult economic backdrop that is not conducive to expansion, or both. That there has been a slow start to 2011 is perhaps a further reflection of this uncertainty. But the market has shown resilience in 2010, and with much dry powder remaining the market 2011 could see a rapid pick up once the economic picture becomes clearer.
 Read: unquote” Private Equity Barometer Q4 2010
 The unquote” Private Equity Barometer is published by Incisive Media. The private equity division of Incisive Media (Initiative Europe Ltd) is an independent provider of specialist and in-depth information focused purely on European private equity and venture capital markets. For more information go to www.incisivemedia.com.

Candover is a provider of equity for large European buy-outs. Since its formation in 1980, it has invested in 135 buy-outs worth over €42bn. The Candover Group has offices in London, Madrid, Milan and Paris. For more information go to www.candover.com.