THE ANNUAL REVIEW 2010 - PEI Media

page 104 private equity annual review 2010
m i d - m a r ke t
Mid-market crowding
Europe’s mid-market attracted the interest of a lot more
players last year, as large-cap groups were compelled to
deploy dry powder down market. Nick Donato reports
Defining Europe’s mid-market became a difficult
task over the course of 2010. During
private equity’s heyday any deal unable to
break the billion-dollar barrier seemed like
small change when viewed alongside the
multi-billion blockbuster transactions in the
back to normal
headlines at the time.
But with roughly half a trillion of dry
powder still awaiting deployment, some of
Europe’s biggest buyout names crept down
into the mid-market arena to seek out
opportunities as deal flow at the larger end
Price multiple averages have bounced back, and then some, to pre-crisis peaks in the lower
end of Europe’s mid-market
Average deal size
18
16
14
12
10
8
6
4
2
0
2007
2008 2009
2010
n €10m – €100m n Over €100m
Source: cmbor.com/Barcalys Private Equity/ Ernst & Young
of the market continued to struggle to match
pre-crisis peaks. And with banks still gunshy
to support multibillion transactions, the
stomping round of the traditional mid-market
players began to feel a little more crowded.
Firms not readily associated with Europe’s
mid-market began to crop up in acquisitions.
Deals such as TPG grabbing UK fashion chain
Republic for £300 million and Blackstone’s
buyout of ICS and Pulse, two staffing agencies
for the UK’s healthcare industry both in the
£100 million range, illustrate the point.
“There’s been a real willingness for big buyout
firms to at least take a look at these smaller
deals”, says David Silver, managing director at
mid-market financial services firm Baird, who
explains dampened credit markets, a paucity of
large deals and a strong desire to deploy capital
were the primary reasons for the shift.
pushing prices
The increased competition in Europe’s midmarket
in 2010 meant prices were pushed
upward, says Charlie Johnstone, a director at
UK mid-market firm ECI. “Suddenly assets
which would traditionally have gone for a value
of around £80 million were going for over a