North West buyout market remains active despite uncertainty

The private equity buyout market in the North West was among the most active outside London and the South East this year, according to new figures.

Data from the Centre for Management Buyout Research found that, despite the slowdown in deal activity due to the EU Referendum and US presidential election, the North West’s private equity buyout market remained buoyant.

The research, which was jointly sponsored by investment firm Equistone Partners Europe and Investec Specialist Bank, showed that the region saw 19 deals completed over the last 12 months.

The figure is higher than the findings for Yorkshire, the Midlands and the South West.

Overall, private equity houses ploughed £523m into the North West this year, generating an average deal value of £27.5m.

Although the figure is a drop against previous years (2015 saw 28 deals worth £901m and 2014 racked up 32 deals worth £1.8bn), the total value of buyouts in the £10m and £25m bracket was up, at £71m.

Deals in the £50m to £100m range, meanwhile, remained largely flat at £162m.

Equistone investment director Andi Tomkinson said: “While the market did not react immediately, the referendum outcome has clearly had an impact on buyout activity in the North West, with the numbers reflecting a decline in the final quarter of the year.

“That said, in the North West market there are always great opportunities. It is home to a number of established private equity houses with significant amounts of capital to invest and there are a lot of a quality businesses and management teams in the mid-market space looking for funding for growth.”

He continued: “Although levels have been lower than previous years, we’ve still seen some impressive deals. This shows private equity’s ability to invest through the cycle and keep putting capital to work despite a challenging macroeconomic backdrop.”

Investec’s Dan Sheahan commented: “The mid-market has been fairly consistent. There remains a willingness to do quality deals, but not at any cost and that is encouraging.

“There are some high prices being paid, with leverage topping out at record levels, so sponsors have been using additional equity to win deals.”

He added: “This underlines sponsors’ belief in the growth prospects of those targets. Historically some of the best deals have been done in down markets and with hefty equity cushions.”