Member Article

Mid-market deal improvements spell recovery for North West

Mid-market deals backed by private equity grew in the North West last year, in both value and volume.

According to the UK Mid-Market Barometer report from LDC, part of Lloyds banking group, the number of deals between £5m and £150m went up by more than 21%, while the value of transactions grew by 35% to £784m.

When compared with figures from 2011, LDC’s report suggests the North West private equity market is continuing its recovery from 2009, when just eight transactions were carried out totalling £168m.

The total value of North West deals between £5m and £50 increased by 39% in 2012, while 19 buyouts were carried out in this same value range.

These deals included the LDC-back management buyout (MBO) of Airline Services Components and the company’s investment in internet service provider Metronet.

Furthermore, four North West buyouts with enterprise values between £5m and £150m came to a total of £385m, including the MBO of manufacturing firm, Bifold Group.

Across the whole of the UK 203 mid-market buyouts were made last year, in comparison with 190 in 2011, while deal values increased from £5.8bn to £8.8bn.

Carl Wormald, head of LD in the North West, said: “Deal volumes and values have consistently improved each year since 2009, demonstrating the resilience and pro-active nature of the dealmaking community in the North West, as well as the high quality management teams and businesses in the region.

“The positive figures across the lower and upper ranges of the mid-market illustrate that private equity remains a core source of funding for North West businesses and in creating value, with investors looking to support those with buy and build potential and international expansion capabilities, in particular.

“Trading conditions remain challenging for businesses, which continues to affect the visibility of future earnings but has seen vendor pricing expectations align with those of private equity investors.

“However, we are still seeing strong valuations for premium businesses, typically those with unique propositions and exposure to high growth frontier economies.

“We invested over £100m of equity into companies in the region last year - as well as backing a number of bolt-on acquisitions within our portfolio - making us the most active sponsor in the North.

“There are early indications that we can do even more to support North West firms’ growth ambitious and the regional economy this year.”

This was posted in Bdaily's Members' News section by Miranda Dobson .