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Private equity holds key to mid market deals in wake of credit crunch

Written by News Desk

Thursday, 24 April 2008

Businesses looking to raise capital for management buyouts or acquisitions could find their funding in private-equity finance alongside banks, according to accountant and business adviser PKF East Anglia. In a survey by the Mergermarket Group commissioned by PKF, Deal Drivers UK predicts that the mergers and acquisitions market for East Anglia has not peaked and there is still potential for deals to continue in the mid market - £5m to £50m price bracket. Deal Drivers UK looked at mergers and acquisitions activity across the country in five key markets – hotels and leisure, business services, food, real estate and manufacturing. It shows that the second half of 2007 saw deals being completed in the £100-£200m range and deals remained strong in the first quarter of 2008. PKF says there is evidence that private-equity interest for management buyouts remains strong and is likely to increase in the wake of the credit crunch. Keith Ferguson, partner of corporate finance said: “Deal Drivers UK shows that M&A activity has had two record-breaking years. With a large amount of small, family owned businesses that favour simple cash-driven financing, there could be more deals to be had.” For those struggling to obtain banking finance, Ferguson advises: “There are approximately 200 private-equity companies in the UK and with specialist help, decision makers on the cusp of a management buyout or wanting to bring in venture capitalist help, could find a suitable financial partner.” PKF East Anglia handled 20 deals collectively valued at over £200m over the last year, most of which were in the region of £5 million to £50 million. Ferguson said: “It is inevitably quite hard for established business people, who have only used asset-backed finance, to switch to acquisition finance, but there is definitely a growing interest in talking to private-equity providers.” Private-equity finance – which could be made up of money from institutional investors such as pension funds and hedge funds – means you will need to be prepared to give up a share in your business and some control to investors, warned PKF. Set as favorite Bookmark Email This Hits: 308 Trackback(0) TrackBack URI for this entry Comments (0) Subscribe to this comment's feed Write comment This content has been locked. You can no longer post any comment.

 

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