European buyout industry shifts towards supporting larger bolt-on deals as market outlook improves
Europe’s private equity industry shifted towards supporting fewer but larger portfolio company buy-and-build acquisitions in the first six months of 2024, according to half-yearly data on bolt-on transactions from CMBOR, the Centre for Private Equity and MBO Research based at Nottingham University Business School and supported by Equistone Partners Europe.
- The 393 acquisitions made by private equity portfolio companies is the lowest H1 figure since 2020
- This decline can be attributed, in part, to improving market conditions allowing sponsors to channel resource back towards executing platform investments
- The aggregate value of bolt-on deals (€3.9bn), however, was the second highest H1 figure since the 2008 global financial crisis, with average deal value more than double last year’s corresponding period, indicating an ongoing shift within the buy-and-build market
The 393 acquisitions made by private equity portfolio companies in the first half of the year is the lowest since H1 2020 and represents a steep fall on the corresponding period last year (513 acquisitions). This decline can be attributed, in part, to the recovery in buyout activity that has taken place across Europe in the first six months of 2024. With gradually improving market conditions triggering a bounceback in dealmaking activity and leaving portfolio companies on firmer ground, sponsors have channelled resource back towards supporting platform investments.
Despite this decline in volume, the aggregate value of these deals (€3.9bn) was the second highest H1 figure since the 2008 global financial crisis and represents a significant increase on the corresponding period last year (€2.5bn). Average deal value (€10m) meanwhile was more than double the figure for the corresponding period in 2023 (€4.9m). These figures indicate an evolution currently taking place within the buy-and-build market, with well-capitalised sponsor-backed companies that have been able to scale despite tough economic conditions now shifting focus towards larger acquisitions in order to consolidate market share. This higher average deal size was likely also driven partly by a reduction in forced-seller situations and upward pressure on valuations driven by the gradual recovery in market conditions.
The industry-wide trend of lower bolt-on volumes was reflected within Equistone’s own portfolio, though the firm still supported 10 bolt-on acquisitions during the first half of 2024: Vertbaudet (Envie de Fraise), Vulcain Ingénierie (GTA), SF-Filter (Ostholte Filter), Timetoact Group (Trustbit), BUKO Traffic & Safety (Road Traffic Solutions Limited and Mrent), Andra Tech Group (Lucassen - Lucassen Groep B.V.), Heras (BA-KRO), Safic-Alcan (Beck Ingredients SL) and Acuity Knowledge Partners (PPA).
“With the buyout market mounting a recovery in the first six months of the year and many portfolio companies having largely weathered the worst of the economic headwinds, it’s unsurprising that there’s been a commensurate drop off in buy-and-build deal volume as firms switch focus to once again executing new platform deals,” said Christiian Marriott, Head of Investor Relations at Equistone. “However, the considerable increase in the aggregate value of these deals underlines the continued importance of the buy-and-build market and its changing nature, with sponsor-backed companies doing fewer deals but at larger valuations.”
The robust performance of bolt-on acquisitions comes amid an improving outlook for the European buyout market more broadly, which, according to provisional half-year data from CMBOR, bounced back from last year’s lowest aggregate value of the past decade with 327 buyouts worth €49.6bn in H1 2024. The recovery was fuelled primarily by a rebound in larger-cap deal activity, with 11 ‘mega-deals’ (€1bn+) accounting for over two-thirds of total value.
“The data highlights the evolving nature of the buy-and-build market,” added Professor Kevin Amess, Director of CMBOR at Nottingham University Business School. “While the volume of deals is down, a natural consequence of firms turning attention back towards executing buyouts, the considerable increase in aggregate value is indicative of the industry’s enduring faith in buy-and-build as a tried and tested mechanism for creating value.”
Pressekontakt
DEUTSCHLAND / SCHWEIZ / NIEDERLANDE
München, Zürich, Amsterdam
- IWK Communication Partner
- Ira Wülfing / Florian Bergmann
- Tel: +49 (0)89 2000 30 30
- E-Mail IWK
FRANKREICH
Paris
- Brunswick
- Agnès Catineau/Aurélia de Lapeyrouse
- Tel: +33 (0)1 53 96 83 83
- E-Mail Brunswick
UK
London
- Hawthorn Advisors
- James Davey / Daniel Thomas / Stephen Atkinson
- Tel: +44 (0)20 3745 4960
- E-Mail James Davey
- E-Mail Daniel Thomas
- E-Mail Stephen Atkinson
Birmingham
- MC2
- Amy Cantrill / Emma Gage
- Tel: +44 (0)161 236 1352
- E-Mail Amy Cantrill
- E-Mail Emma Gage
Manchester
- MC2
- Liam Buckley
- Tel: +44 (0)161 236 1352
- E-Mail Liam Buckley