European buyout market in 2009 plummets to lowest level in 14 years

European buyout market in 2009 plummets to lowest level in 14 years

23 Mar 2010

Significant uplift in buyout activity in fourth quarter

The overall value of European buyouts* fell by 74% in 2009 to €19.1bn compared to 2008 (€72.8bn), representing a return to 1995 buyout levels, according to the latest data published by the Centre for Management Buyout Research (CMBOR).

The European buyout market, however, saw a significant upturn in the final quarter of 2009 with the overall value of private equity-backed buyouts totalling €5.5bn more than double the figure recorded in the third quarter of €2.9bn.



  • The volume of private equity-backed European buyouts in 2009 fell to its lowest level since 1993 with 423 deals completed in total. The value of private equity-backed buyouts for the year totalled €17.3bn, the lowest since 1995.
  • Despite the dramatic contraction in the value of buyouts in the UK, this market continues to be by far the largest in Europe, accounting for almost a third (31%) of all European buyouts by value, totalling €5.3bn.
  • Germany and Spain recorded the steepest decline, the value of buyouts fell by over 80% in both markets from 2008. The UK saw a 77% decrease in the value of buyouts over the same time period.
  • Q4 2009 showed signs of recovery with the overall value of deals reaching nearly double that recorded in Q3, at €2.9bn and €5.5bn respectively.
  • Public to private (PTP) transactions, which accounted for 16% of overall buyout activity by value in 2009 (€2.7bn) showed a significant increase in Q4 from just €56m in Q3 to €750m in Q4. In 2008, the total value of PTP deals was €14bn.
  • Deal pricing for European buyouts fell in 2009, especially for larger deals. EBIT multiples for buyouts over €100m fell from 16 times in 2008 to 11 times last year. For buyouts in the €10 to €100m range multiples fell from 11.8 to 9.5 times over the same time period.
  • At the end of 2009, over €612bn was invested in unrealised buyouts in Europe. Given senior debt accounted for 46% of the average deal consideration over the past 10 years, this would indicate that the banking sector’s exposure to the European private equity market is approximately €282bn. This reflects a 45% increase since 2005 and a three-fold increase since 2000 (€194bn and €92bn respectively).

* The first figures provided of €19.1bn and €73bn refer to all European buyouts (including those without a private equity sponsor). All remaining figures in the release relate only to private equity-backed buyouts.

By country

  • Germany and France each accounted for 10% of the European market by value. Buyouts in Germany totalled €1.9bn closely followed by France at €1.8bn.
  • Belgium saw a significant increase in deal activity, totalling €1.6bn for the year but largely skewed by the €1.3bn buyout of Skype Technologies from eBay by a consortium led by Silver Lake Partners.
  • Austria and Ireland also recorded an increase in deal activity. In Austria, the total deal value nearly tripled to €437m (2008: €150m), although the volume of deals remained level. Ireland remains a relatively small market for private equity but showed an increase in total deal value of 17% to €274m (2008: €235m).

Deal sizes

  • Average deal sizes across Europe more than halved from €91.4m in 2008 to €40.8m in 2009. There were just five €500m plus deals recorded in 2009 with a total value of €4.5bn compared to 31 deals in 2008 totalling €30.6bn.
  • The largest €500m plus deal was the €1.4bn buyout of NDS Group in the UK in February. There were no deals of this size in Q3 and just one deal in Q4 when the €1.3bn buyout of Skype Technologies from eBay buyout was completed.
  • Deals under €10m accounted for more than half the number of buyouts in Europe in 2009 with 249 deals recorded. Buyouts of this size saw only a slight decrease from the 264 deals recorded in 2008.
  • Activity in the lower mid-market (€10m to €100m) showed a significant decline. The total value of deals in this range fell by two thirds from €13bn in 2008 to €4.3bn in 2009 with the overall volume of deals less than half the prior year.
  • Overall deal sizes increased towards the end of the year. On average, deals in Q4 were nearly double the size of those in Q3 (€47.7m and €27.4m respectively).

Deal source and sector

  • There was a five-fold increase in the value of buyouts of businesses out of receivership from just €207m in 2008 to €1.1bn in 2009. There were 28 deals of this type in 2009, up from just 16 recorded in 2008.
  • The TMT sector saw the highest value of buyouts in Europe totalling €4.3bn with €1.4bn of this accounted for by the buyout of NDS Group in the UK.
  • The manufacturing sector recorded the highest volume of deals in Europe at 102 in 2009. Average deal size in the sector was significantly smaller than 2008; €22.4m in 2009 compared to €79m in 2008.
  • Q3 2009 was a quiet period for buyouts from foreign parent companies, public markets and receivership. However, Q3 saw a significant spike in secondary buyout activity with a total of €1.3bn of deals recorded from 15 transactions (out of a total value of €2.9bn for all buyouts in the quarter). The total value of secondaries, however, halved towards the end of the year, with €612m recorded in Q4. The average secondary deal size fell from €85.3m in Q3 to €55.6m in Q4.

Christiian Marriott, Director at Barclays Private Equity commented on the findings:

“Continental Europe has seen a marked decline in buyout activity in 2009, along with an overall slowdown in the UK market. At the peak of the buyout market in 2007, the total value of European buyouts totalled €168.9bn, nearly 10 times the €17.2bn recorded in 2009. 

“Encouragingly, however, there has been a significant upturn in the fourth quarter of 2009.  We have also started to see an increase in the number of deals getting done at the start of this year signalling a return of confidence in the European buyout market and a gradual easing of the debt markets. In particular, there has been far greater interest from private equity investors in publicly-listed companies  – where investors are now seeing value post-recession – reflected in the significant rise in the value of PTPs in the fourth quarter.  We have also seen a rise in the number of businesses that have gone into receivership being acquired by private equity firms demonstrating where private equity can make a contribution to the economic upturn.

“Despite a significant decline in investment activity in Europe, banks’ total exposure to the private equity market has risen by around 45% in value since 2005 and we can, therefore, expect to see a significant proportion of debt which will need to be refinanced over the next five to ten years.  This is especially the case for investments made prior to the recession and, in general, due to the longer holding periods for private equity investments given the current economic climate.”

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