Buyout values spark recovery hopes

The total value of buyouts in Yorkshire and Humber increased to 1.17bn between April and the end of June, compared with just 287m from January to March, according to the Centre for Management Buyout Research (CMBOR).

But industry experts warned this reflects only a gradual recovery in the buyout market, with just three big deals dominating the period.

The total deal value for the first half of the year was 1.46bn, compared with just 311m for the whole of 2009.

The second quarter saw the highest quarterly total deal value for the region since the final quarter of 2007, when deals hit 1.19bn.

Large deals included the 500m sale of Lord Kirkham's Doncaster-based sofa retailer DFS to Advent International in June.

April saw private equity firm Charterhouse's 350m buyout of greetings card business, Card Factory, from entrepreneur Dean Hoyle.

Texas-based private equity giant TPG sealed the secondary buyout of Leeds-based fashion retailer Republic from Change Capital Partners in June for 300m.

The DFS transaction accounted for 42 per cent of the total value of deals in Yorkshire and Humber in second quarter, contributing to an average deal value of 26.7m for the period.

There were 17 deals in the second quarter in the region, up from 12 in the previous quarter. Of the 17 buyouts in Yorkshire and Humber, 13 were under 10m with a combined value of 17m.

There were seven buyouts of family or private companies, making this the largest source of deals in Yorkshire and Humber. Another four transactions came from local parent companies, compared with five for the whole of 2009.

Steve O'Hare, director at Barclays Private Equity in the North, which sponsors CMBOR, said: "After an encouraging upturn in the first quarter of 2010, the second quarter has provided further evidence of the beginnings of a recovery in the Yorkshire and Humber buyout market.

"This is reflected in the four-fold increase in the total value of deals and the average value for the region.

"Despite this, there remains a lack of buyouts in the 10m to 100m bracket, which is reflected in the fact that the three large deals completed in Yorkshire and Humber in the second quarter made up 97 per cent of the overall deal value in the region.

"While results for the second quarter are encouraging on the whole – particularly in light of concerns surrounding the recent general election and the impact of public sector spending cuts – they represent only a step in the gradual recovery of the regional buyout market."