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Subdued activity in the UK buy-out market continues into the final
half of the year
Number and value of UK buyouts declines quarter on quarter during 2011
London, 25 September, 2011 - The overall value of UK buyouts in the first three quarters of
2011 reached £7.8bn, lower than at the same point last year, when a resurgent buyout
market totalled £13bn, according to the latest data published by the Centre for Management
Buyout Research (CMBOR), sponsored by Ernst & Young and Barclays Private Equity.
While activity throughout 2011 has been subdued in comparison to last year, the value of
buyouts in the third quarter reduced markedly, with values slumping to £1.1bn, compared to
£3.1bn in Q2 and £3.6bn in Q1.
The number of buyouts also fell in the third quarter from 51 in Q1, 38 in Q2 to 35 during the
third quarter. In the nine months to September there have been 124 deals, compared to 139
at the same point last year. The total value of buyouts this year only equates to 42% of last
year’s total.
Sachin Date, Private Equity leader for Europe, Middle East, India and Africa (EMEIA) at
Ernst & Young comments, “The slowdown in activity in both value and volume this quarter
clearly reflects a weakening in business confidence.”
Christiian Marriott, Director at Barclays Private Equity, says: “The exit market has declined in
the third quarter in line with the overall buyout trend. While the market sentiment remains
cautious, increased interest from international corporates in private equity assets is evident
and is set to continue - the total value of exits to trade buyers has performed strongly in
2011, outstripping the total value of secondary realisations for the first time since 2006. By
contrast, the IPO market for private equity-backed firms has remained firmly closed for
business in the UK."
The continuing shift from to debt to equity
Equity levels have remained high in 2011, with some all equity transactions taking place. For
the nine months to September, equity accounts for 68% and debt 24%, this compares to
65% and 29% respectively during 2010.
The proportion of equity held by management currently sits at 24% which compares to 31%
for 2010.
“So far this year we have experienced a lot of 100% equity deals, which is the highest level
of equity proportion since data records began. Much of this is down to the risk aversion and
nervousness amongst the banking sector to provide debt to fund these deals,” says Date.
Smaller deals are proving more attractive
Deal values and volumes in the lower mid-market deal space (£10m – 100m) are relatively
positive in the context of this year’s overall performance, with 60 deals completing in the first
three quarters with a value of £2.1bn.
This compares to 55 deals at the same point last year (value £1.9bn) and 68 for the whole of
2010 (value £2.3bn).
Date comments, “The current trend is for PE to consider smaller deals because of the lower
gearing and lower risk involved in each deal. We are also seeing competition intensifying
among PE houses for deals in this value range, as a consequence of houses competing for
far fewer quality assets.”
Sectors under the spotlight
Putting the Brit Insurance deal to one side, activity levels across the financial services sector
have been low. Contrary to predictions, there has been a distinct lack of post crisis
consolidation in the industry.
One factor could be that the industry is so highly regulated that PE houses are put off by the
level of red tape. This said, there are some deals on the periphery of financial services,
those companies that provide business support and technology to the sector that could
transact in the near future.
The number and value of buyouts in the retail sector have declined significantly this year,
recording only 9 and £992m respectively. This compares to 16 deals completed with a value
of £2.8bn in 2010.
Date comments, “The retail sector enters its most important trading period in the lead up to
Christmas but with disposable income stretched it is likely to be tough on the high street for
some time to come.
“Only 10% of deals have been brought out of insolvency this year but we could we see an
increase in pre-packs over the next three months, as a result of more distress in the retail
sector?”
Other findings

Pace slows for large buyouts
The research reveals that larger buyouts have slowed in 2011. For the first three
quarters of this year, there were 15 deals over the £100m mark, with a total value of
£5.6bn, this is compared to 30 deals with a total value of at £10.9bn at the same point
last year.
The largest buyout for Q3 was V-Ships with a value of £319m, and the largest this year
was Priory Group for £925m in March.

Public to Private slows
Public to Private (PTP) buyouts have been extremely slow in 2011 with only four having
completed so far this year, totalling £1.0bn. This is the second lowest number of PTP
transactions since 2009 and is in stark contrast to 2010 when 12 completed.
Brit Insurance is the largest PTP deal this year, delisting for £888m in March. Without
this deal values would be low at £138m.

Secondary buyout exit route remains popular
Secondary buy outs have remained high this year, with 41 recorded in the three quarters
to September with a total value of £4.1bn. This compares to 41 for the whole of last year
with a total market value of £7.3bn.
The largest exits during the third quarter were V Holdings/V Ships (Secondary buy-out
£319m), and Toms Confectionery/Tangerine Confectionery (Secondary buy-out £120m).
Ends
Trends of (PE Backed) Buy-outs/Buy-ins
450
50000
400
45000
350
40000
Number
30000
250
25000
200
20000
150
£ million
35000
300
15000
100
10000
50
5000
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
0
1985
0
Total Value (£m)
Total Number
Source: cmbor.com/Barclays Private Equity/Ernst & Young
* Year 2011 figures are for first 9 months only
Trends of £10-100m Buy-outs/Buy-ins
250
7000
6000
200
150
4000
3000
100
2000
50
1000
Total Number
Total Value (£m)
Source: cmbor.com/Barclays Private Equity/Ernst & Young
* Year 2011 figures are for first 9 months only
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
0
1985
0
£ million
Number
5000
Average Deal Structures by type of Finance (%) above £10m
120
100
80
60
40
20
Equity
Mezzanine
Debt
Loan Note
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
0
Other Finance
Source: cmbor.com/Barclays Private Equity/Ernst & Young
* Year 2011 figures are for first 9 months only
Media Enquiries
Ernst & Young
Adam Holden, Ernst & Young media relations – 0121 535 2128 / 07917000028
Merlin
Rachel Thomas – 020 7726 8400 / 07787 504 447
Zinka Bozovic – 020 7726 84000 / 07769 255 380
CMBOR
Mike Wright, Professor of
Entrepreneurship, Imperial College
London Business School and Director of
CMBOR
Rod Ball, Research Fellow, Imperial
College London Business School
Barclays Private Equity
Christiian Marriott, Director
020 7594 2606
0115 951 5091 / 07904
214639
020 7653 5306
Notes to editors
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About CMBOR
The Centre for Management Buy-out Research (CMBOR) was founded at Nottingham University Business
School in 1986 and has been sponsored by Barclays Private Equity since its establishment. CMBOR is worldrenowned as the long-standing leader in providing robust analysis of the buy-out market.
CMBOR data covers all buyout activity and therefore includes transactions funded on a cash or debt-only
basis as well as traditional private equity-funded buyouts.
On 1st September 2011, CMBOR moved to Imperial College London.
Barclays Private Equity
Barclays Private Equity is one of Europe’s leading investors in mid-market buyouts with a successful track
record spanning over 25 years. It has successfully completed more than 350 transactions during this time and
has generated attractive returns for its investors.
It has a team of over 40 investment professionals in seven offices across five countries. Its offices are in
Birmingham, London, Manchester; Paris; Munich; Milan and Zurich.
Its investment in individual transactions ranges between €10m and €300m although it is able to underwrite
much larger equity investments which would be shared with co-investors.
In the UK, it has a sector focus on Consumer & Travel, Financial Services, Support Services and Specialist
Engineering.
Barclays Private Equity has raised over €5 billion of committed capital and has many of the world’s leading
investors amongst its investor base. It is currently investing the €2.45 billion Barclays Private Equity Fund III
which closed in September 2007.
The buyout team is currently investing funds from Barclays Private Equity European Fund III alongside
those of its parent, Barclays Bank PLC. Barclays Private Equity’s portfolio of investments across all its funds
under management currently consists of over 50 companies.
Barclays Private Equity Limited, a Barclays Capital Company, is authorised and regulated by the Financial
Services Authority. Registered in England no. 1125740. Registered Office: 1 Churchill Place, London, E14 5HP.
For further information, please visit www.bpe.com.