North East deals well down

Apr 30 2008 by Peter McCusker, The Journal

NEW research shows the national level of deals so far this year is on target to hit £5bn.

The Centre for Management Buy-out Research (CMBOR), the leading provider of analysis on the UK buy-out market founded by Barclays Private Equity and Deloitte, has revealed that deal value for the first quarter this year has so far hit £4.3bn and is predicted to rise to well over £5bn by the end of quarter.

In the North East, buyouts and buyins in the first quarter have declined significantly from £12.7m in 2007 to £3m for the first quarter of 2008, the survey claims.

The North East buyouts for 2008 included Northumbrian Fine Foods, based in Gateshead, in the food manufacturing sector, and CP Hart and Sons, based in Darlington in retail distribution.

Paul Kaiser, corporate finance associate partner at Deloitte in Newcastle, commented: "Quarter one of 2008 has seen no sizeable MBO/MBI’s transactions within our region.

“These larger transactions clearly have a significant impact on the reported values. However, I do suspect that there will be several larger transactions completed throughout the course of the year. What is surprising is that the transaction rush to beat the ending of CGT taper relief at the end of the tax year hasn’t resulted in more sales to management in the region. I do expect to see an increase in corporate acquisitions as a result.

“My expectation is that overall for 2008 we will see the total number of MBO/MBI transactions down on 2007 in part due to uncertainly in the banking market.

 “A lack of availability of bank funding is impacting valuations which are falling across all sectors. As a result sellers are deferring their sales until markets improve. I expect conditions for MBO/MBI activity will be challenging for rest of 2008 with a hopeful recovery during 2009.”