Private equity owners go on a ‘buy and build’ spree in Europe

According to Silverfleet Capital’s monitor, there were 368 add-on deals in the first half of 2019

Private equity-backed companies in Europe made 368 add-on acquisitions in the first half of the year — the highest ever recorded for the period since 1998, according to mid-market buyout firm Silverfleet Capital.

The number of acquisitions by portfolio companies in the first half went up 9% year-on-year, Silverfleet found. The combined value of add-on deals was €2.4bn, down from €4.9bn in the first half of 2018. This is due to a trend of not disclosing deal values, the firm said, with only 11% of the total number of buyers revealing how much they paid for the add-ons.

On average, firms spent €70m per add-on acquisition, down from €180m in the first half of 2018.

The Nordic region was the most active, with 72 add-on acquisitions announced, followed by the UK and Ireland with 58. The UK and Ireland performed worse than in previous periods as “Brexit may have deterred some companies from pursuing buy-and-build in the region,” the report noted.

In contrast, Austria, Germany, and Switzerland — usually countries with the most buy-and-build activity — performed poorly relative to H1 2018, due to tougher economic conditions.

Gareth Whiley, managing partner of Silverfleet Capital, said: “We think that this continues to show the importance of buy-and-build as a value creation tool for private equity even in the face of greater general market uncertainty.”

Source: Financial News

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