Deals market back on its feet as three-month tally hits £287.1m

The value of buyouts in Yorkshire and the Humber increased by 85 per cent to 287.1m in the first three months of 2010, according to the latest data from the Centre for Management Buyout Research, sponsored by Barclays Private Equity.

This is only 18m less than the value of buyouts for the whole of 2009, which stood at 305.4m.

The first three months of 2010 were the best quarter for deals since early 2008.

The market was greatly boosted by the buyout of Leeds-based car parts distributor Andrew Page for around 100m in March by private equity firm Phoenix.

The other big deal was the buyout of commercial laundry equipment supplier JLA, based at Ripponden, near Halifax, for an estimated 150m.

These two transactions accounted for 87 per cent of the total value of deals in Yorkshire and the Humber in the first quarter of 2010.

At the same time fewer Yorkshire companies are going bust.

In the first three months of the year Yorkshire company winding up petitions fell by 18 per cent from 416 to 341.

Mark Firmin, KPMG's head of restructuring in the North, said: "The fall in corporate insolvencies may indicate economic improvement, although concerns including public sector spending cuts, turmoil with the euro and relatively high unemployment make this improved position fragile."

KPMG believes that as the economy starts to move out of recession, the key risk for the region's businesses is an imbalance between the orders a company takes and its ability to fulfil them.

"Where there is an imbalance a company is at risk of failing," said Mr Firmin. "Even profitable companies can fail due to lack of cash, which may be exacerbated by the current environment's lack of liquidity."

According to today's report by the Centre for Management Buyout Research there were 12 deals in Yorkshire and the Humber during the first three months of the year, up from 11 in the previous quarter.

Of the 12 buyouts nine were under 10m and had a combined value of 12m.

There was only one deal in the mid market 10m-100m range, the 25m buyout of fast-food restaurant chain Harry Ramsden's by Boparan Ventures.

There were five buyouts of family or private companies, making this the largest source of deals in Yorkshire and the Humber.

Only three businesses were bought out of receivership over the three months, which compares favourably to 14 for the whole of 2009.

Steve O'Hare, director at Barclays Private Equity in the North, said: "After a slow 2009, there is evidence of the beginnings of a recovery in the Yorkshire and Humber buyout market, thanks in part to stabilising company valuations and the banks' appetite to lend slowly returning."

He said this is reflected in the total value of deals and the average value in the region, propped up by the buyouts of JLA and Andrew Page.

But there remains a lack of buyouts in the 10m-100m bracket, which is reflected in the fact that the two large deals completed in Yorkshire and the Humber made up 87 per cent of the overall deal value in the region.

"While results for the first quarter of 2010 are encouraging on the whole, this is only a step in the gradual recovery of the regional buyout market," said Mr O'Hare.

The Centre for Management Buyout Research was founded in 1986 and has been sponsored by Barclays Private Equity since its establishment.

The data covers all buyout activity and therefore includes transactions funded on a cash or debt-only basis as well as traditional private equity-funded buyouts.

Barclays Private Equity invests in mid market buy-outs in the UK, where it focuses on the Consumer & Travel, Financial Services, Support Services and Specialist Engineering sectors.

In addition to the mid-market buy-out business, Barclays Private Equity also has a separate team managing funds targeted at the infrastructure sector.