Drop In Average UK LBO Deal Size in Second Half of 2011

by Kevin Smith

  • 02 Feb 2012
  • PE

The UK leveraged buyout (LBO) market in 2011 saw deal volume return to figures similar to those seen in the pre-crisis boom-era, with 319 deals recorded during the year compared with 352 deals recorded in 2007. The aggregate value of UK-based LBOs increased slightly during 2011, hitting £14.36bn ($23.7bn) in comparison to the £14.3bn seen in 2010; however total deal values seen in recent years remain significantly lower than the 2007 peak, when LBOs in the country totalled £31bn ($61.6bn).

The first half of 2011 saw average LBO deal size in the UK increase progressively from £120mn ($194mn) in Q1 to £141mn ($227mn) in Q2 2011. During the second half of the year, however, the average UK LBO deal size dropped significantly, hitting a trough at £98.5mn ($154mn) in Q3 before returning to a marginally stronger figure in Q4 at £102mn ($160mn). Overall, the average LBO deal size for the entire year was £116mn ($182mn), representing the lowest level since 2009, when the average size stood at £83mn ($134mn).

During 2011 the largest private equity-backed transaction seen in the UK market was the £1bn ($1.6bn) leveraged buyout of motor services firm RAC, by the Carlyle Group, with the purchase being supported by a £620mn debt package. Other notable deals in the UK during the year included the £935mn ($1.448bn) buyout of The Priory Group by Advent International, and the £900mn ($1.445bn) take private of Northern Rock by lead investor Virgin Money and WL Ross & Co and Stanhope.

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