Value of private equity-backed ‘carve outs’ triples due to Covid and war in Ukraine

The value of carve out acquisitions by private equity funds jumped threefold from £3.8bn last year to £13.4bn in the year running up to 31 August 2022

The value of private equity-backed carve out deals, through which funds buy up an entire business line, subsidiary, or unit, has more than tripled over the past year.

The uptick comes as major corporates are increasingly seeking to sell off non-core assets following the economic disruption caused by Covid-19 and the war in Ukraine.

Activist investors, increasingly keen to see focus, differentiation, and improved returns, are also pushing businesses into selling off non-core assets.

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The higher value of deals comes as the total number of private equity-backed carve outs jumped by 76%, from 17 last year to 30 this year.

Carve outs allow companies a way to free up resources and cash, in the face of a looming economic downturn. Firms are then able to invest the freed-up cash in core parts of their business.

Carve outs also enable corporates to realise value from a business unit where there may be limited options for future growth under its current ownership.

Source: City A.M.

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