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Pandemic slows European buyout industry after strong start to 2020

23 Juni 2020

The Covid-19 pandemic has pushed European private equity deal volume in the first half of 2020 to its lowest level since the global financial crisis, despite a strong start to the year and a steady stream of deal completions during lockdown, according to provisional half-year data from CMBOR at Imperial College Business School, sponsored by Equistone Partners Europe and Investec Corporate and Investment Banking.


  • Amid coronavirus lockdown, European private equity market records fewest buyouts in past decade, with 205 deals valued at €41.1bn in H1 2020
  • Sharp slowdown follows confident opening to 2020, with a drop of more than 50% in total deal volume and value from Q1 to Q2
  • Continued completions boost public-to-private deal values to record post-2008 half-year figure of €16.6bn
  • TMT, the most active sector with 55 deals valued at €15.3bn, well positioned for future activity

With 205 private equity-backed acquisitions having taken place in Europe, compared to 331 in H1 2019, the buyout industry is set to record the fewest deals in a half-year period since H1 2009. However, these transactions’ cumulative value of €41.1bn is close to the H1 2019 total (€44.3bn) and surpasses the equivalent figure for both halves of 2016 (€36.8bn and €28.4bn, when the market was shaken by the UK’s EU referendum), signifying a weighting towards larger deals. Exit activity has experienced an even more pronounced drop, extending the industry’s recent shift towards buying mode: private equity firms have sold 95 companies with a total value of €24bn in H1 2020, both decade-low figures for a half-year period.

A half-year of two halves

The heavy concentration of activity in the first three months of the year underlines both the robustness of the European buyout market prior to the spread of coronavirus and the speed with which the pandemic caused deal processes to halt. The UK, which retains its position as Europe’s largest market by value and volume, has recorded 64 deals valued at £13bn (€14.7bn) in H1 2020, with approximately 80% of these taking place in Q1. Both Germany – the second largest market, with 31 deals cumulatively valued at €13.8bn – and the Benelux region – with 30 buyouts valued at €3.7bn – experienced a c.50% drop in deal volume between Q1 and Q2. France, where 28 deals with a total value of €5.4bn have taken place, is a notable outlier, having recorded volumes which were relatively flat quarter on quarter.

“The Covid-19 pandemic completely transformed the buyout landscape, after an opening to the year that in many respects was business as usual for the industry,” commented Christiian Marriott, Partner and Head of Investor Relations at Equistone Partners Europe. “In a matter of weeks, private equity firms moved from actively seeking to deploy capital to focusing on protecting their portfolios and overwhelmingly pausing new investment and exit activity. Positively, as urgent issues within the portfolio are being resolved and lockdown measures ease, it should be possible for buyout firms and advisors to restart previously suspended deal processes, and we may see some increased deal activity in the coming months.” 

Deal completions continue through lockdown

Many of those buyouts that did take place in Q2 are testament to buyers and vendors having successfully completed on transactions agreed in the pre-pandemic period, despite the changed market environment. The 7 public-to-private deals which completed in Europe in H1 2020 constitute the tail end of the increasing flow of private equity capital into large-cap take-private transactions in recent years. Their cumulative value of €16.6bn represents the highest half-year total for buyouts of public companies in the past decade. 

Secondary buyouts and corporate divestments also continued, albeit at reduced levels. Transactions between private equity firms have accounted for 45 deals worth €14.4bn (11 of these taking place in Q2), while there have been 39 PE-backed acquisitions of assets from corporate vendors at a total value of €5.7bn (10 of which completed in Q2). In the latter category, Advent and Cinven’s €17.2bn buyout of the Elevator Technology business of thyssenkrupp, which was announced in February and would rank as one of Europe’s largest ever, remains set for completion in Q3, subject to arranging debt financing.

Christian Hess, Private Equity Client Group Head at Investec, commented: “On the one hand, Covid-19 is – and will remain – an inhibitor for any deal maker in the short to medium term. On the other hand, the imbalance of supply and demand for Tier 1 assets is even more pronounced now than before.”

“As a result, whilst it will take time for M&A volumes to return to previous highs, our prediction for the remainder of this year is to see (i) more structured deals, (ii) deal mix shifting away from PTPs and secondary LBOs in favour of primaries, and (iii) an even stronger pre-emptive buyer bid for Tier 1 assets inside or outside of a process.”

TMT and healthcare to lead recovery

With 55 deals valued at €15.3bn, the TMT sector has been Europe’s largest by both volume and value in H1 2020 and is predicted to perform strongly into the future. “We are already seeing signs that activity is picking back up for top-quality assets in those sectors set to benefit from Covid-19-related structural changes to the economy, such as technology and healthcare. Markets like Germany, where the exit from lockdown is more advanced and there is a clearer exit strategy, will also interest sponsors,” adds Christian Hess. This is exemplified by recently announced deals such as EQT’s buyout of hygiene product manufacturer Schülke. 

Manufacturing, historically Europe’s most active sector for buyouts, ranks a close second in H1 2020, recording 54 deals with a cumulative value of €11bn. Christiian Marriott says: “While there will undoubtedly still be interesting investment opportunities, the private equity industry will need to comprehensively reassess its assumptions about the market dynamics within which these businesses operate. That, combined with the prospective cliff-edge of no trade deal being agreed between the UK and the EU by the end of the year, will likely act as a drag on the recovery in total buyout volumes in the medium term.”

Notes to editors:

About CMBOR – Methodology

The data compiled by CMBOR summarises trends in buyouts across Europe (Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Czech Republic, Hungary, Poland, Romania and Turkey and the UK). Data cut-off date: the data in this press release is for deals completed by 12 June 2020. CMBOR defines buyouts as over 50% of shares changing ownership with management or private equity, or both having a controlling stake upon deal completion. Equity funding must primarily be from private equity funds and the bought-out company must have its own financing structure, e.g., MBO/MBI.

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