Yorkshire buyout market grows strongly in 2014 as exit value peaks

A strong end to the year helped the total value of private equity-backed buyouts in Yorkshire and Humberside grow by 44% in 2014, while the trade sale of Sheffield-based Firth Rixson, alongside a number of other significant trade sales and IPOs, boosted the combined value of exits in the region to a record high.

According to the latest figures from the Centre for Management Buyout Research (CMBOR), which is sponsored by EY and Equistone Partners Europe, the total value of private equity-backed deals in Yorkshire and Humberside reached £1.81 billion in 2014, up from £1.26 billion in 2013.

The regional market’s performance this year was buoyed by 4 buyouts with a combined value of £785m in Q4 2014, representing the highest quarterly total value since Q2 2010. The number of deals in Yorkshire and Humberside for the whole of 2014 increased by 77% to 23, up from 13 a year earlier.

The total UK buyout value declined to £14.98 billion in 2014, compared with £15.12 billion a year earlier, while the number of deals in the UK increased from 193 in 2013 to 214 in 2014.

Meanwhile, the landmark trade sale of Firth Rixson in November supported the largest annual total exit value ever recorded in Yorkshire and Humberside at £4.71 billion, which was double the £2.36 billion recorded in 2013. Other significant exits in the region included the private equity-led IPOs of Card Factory (May) and Polypipe Group (April).

Corporate Finance Director at EY in Yorkshire and Humberside, Mark Clephan, said: “The Yorkshire buyout market has had an outstanding 2014 as favourable debt market conditions, a number of well-capitalised and active private equity firms operating in the region, and greater economic confidence have helped to deliver more deals, predominantly in the lower mid-market.

“2014 will also be remembered for its exits in Yorkshire, albeit the total figure is skewed by the sale of Firth Rixson. Corporates continue to be acquisitive and while we’re likely to see fewer IPO exits in 2015, this route remains open for exceptional private equity-backed businesses that are clearly differentiated and have proven profitability.

“Sponsors operating in the region have dry powder ready for deployment. There is currently a strong pool of Yorkshire-based corporates entering new phases of investment and the challenge for private equity in 2015 will be backing the right businesses at fair valuations.”

Partner at Equistone Partners Europe in Yorkshire, Steve O’Hare, said: “It is encouraging to see that the value of exits has risen again in the region and that quality management teams are partnering with private equity to fund growth.

“Yorkshire is a great place to do business and benefits from having a close-knit community when it comes to dealmaking. This drives competition for quality assets and helps to create a healthy flow of deals.

“The mood is definitely positive for 2015 and sectors such as industrials, manufacturing and retail are looking hot for investment over the next 12 months.

“This year, our Northern team has realised one exit and completed two new investments and we look towards 2015 with great optimism.”