The UK buyout market performed respectably in 2018
Looking back at 2018, Private Equity (PE) deal activity continued strongly through the year, fuelled by the ready availability of both debt and equity financing. According to The Centre for Management Buy-out Research (CMBOR), the number of UK buyouts increased slightly to 402 in 2018. However, the overall value of deals fell significantly from £28bn in 2017 to £21bn in 2018, primarily due to a decline in the number of mega deals, as bigger funds increasingly focused on deals outside the UK given the continued uncertainty surrounding Brexit.
The London and South East market showed particular resilience, with a material rise in both the number and value of buyouts in 2018, making it by far the most active region which meant it accounted for over two thirds of UK buyout value in 2018 according to CMBOR.
Rising volatility and uncertainty over the economic and political outlook, partly as a result of Brexit, coupled with where we are in the cycle has driven a flight to quality, with good assets, particularly in sectors that are not exposed to discretionary consumer spending, continuing to attract strong interest and trade at attractive multiples.
Therefore, while the five year rise in average deal multiples may be beginning to slow, pricing remains high.