Region lagging as UK buyouts blossom

The UK has reclaimed its position as the most active buyout market in Europe but Yorkshire is still catching up with the national picture.

According to accountancy firm Ernst & Young, the UK recorded almost half of all European deals in both value and number for the first quarter of 2012.

There were 62 buyouts and the highest quarterly deal value since 2010, totalling £5.2bn. However, only two buyouts were completed in Yorkshire in the first three months of the year, totalling £3m.

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David Buckley, Yorkshire senior partner at Ernst & Young, said: “In contrast to the overall UK position, Yorkshire has not yet seen a marked pick-up in buyout activity in 2012.

“Low deal volumes (under eight) and a slow first quarter have remained a consistent theme over the last four years. However, current deal activity in the second quarter of 2012, points to a more encouraging outlook for the remainder of the year.”

He added: “Deals have taken longer to do or haven’t happened at all in Yorkshire because there has been more caution – by the corporates in their assessment of what to do and the banks when considering the appropriate lending. In the second quarter it looks like Yorkshire’s pattern is trending towards the national pattern.”

With the UK economy still faltering and the eurozone, experiencing high levels of volatility, one side effect has been an upturn in both the number and value of deals resulting from insolvency.

Values from insolvency related deals were the highest of any deal source this quarter, recording over £1.5bn. The number of deals was also high in comparison to previous years with nine being recorded, compared to 16 for the whole of 2011.

Sectors which saw both the highest value and number of deals were the retail and manufacturing sectors. Nationally, retail totalled £1.6bn with seven deals and manufacturing £1bn with 11 deals.

There has been a trend over recent months of private equity houses being perceived as the white knights to rescue distressed retail and activity focused on this sector is likely to continue, Mr Buckley said.

Meanwhile, research by Grant Thornton found that the quarterly number of mergers and acquisitions involving British targets has seen its fourth consecutive fall, dropping to its lowest level since the 90s, with 478 deals worth £17.1bn.