ROLAND BERGER SRL

 | 

MIHNEA RADULESCU

  |  25.03.2013

European private equity outlook 2013: chin up!

Is the private equity market on the upturn? Despite a more positive mood in the industry, the private equity (PE) business model still needs to be adapted (Based on the "European Private Equity Outlook 2013" study conducted by Roland Berger Strategy Consultants1)

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ROLAND BERGER SRL

MIHNEA RADULESCU

MIHNEA RADULESCU

SENIOR PROJECT MANAGER at ROLAND BERGER SRL

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The mood is upbeat once again in the European private equity sector. After a more pessimistic feel among PE investors in 2012, more deals are anticipated this year, especially in Scandinavia, Germany and even CEE2. Really big transactions are still expected to be the exception however, partly because the economic situation remains uncertain, with Spain, Portugal, Italy, France and Greece even likely to continue to experience a slight decline.
 
 
Thus, despite more liquidity in the market, debt financing will remain difficult, leading to no spectacular increases in purchasing prices. All in all, in light of the difficult economic context, two thirds of the 1,200 European executives surveyed are of the opinion that the business model of PE companies needs to be examined and adjusted to fit the new market environment. These are the key findings of the new "European Private Equity Outlook 2013" study by Roland Berger Strategy Consultants, outlining main expectations for the PE market in 2013.
 
 
Development of private equity M&A market in 2013  – The number of M&A deals with PE involvement is going up
 
 
The mood in the European private equity market is slowly but surely picking up. Since the overall economic prospects are expected to remain unchanged, this can be attributed to improvements in financial markets and a more positive development of the euro crisis. Currently, 52% of those surveyed believe the number of M&A transactions with PE involvement will go up compared to last year, especially in Scandinavia (+2.7%), Germany (+2.4%), Poland (+1.9%) and overall in CEE (1.5%), whereas a slight drop in market activity is only expected in those countries struggling most with the euro crisis – more specifically Greece  (-1.0%), France (-0.7%), Spain/Portugal and Italy (-0.6%).
 
 
In terms of targeted industries, investors expect most activity will take place in pharmaceuticals and healthcare (54%), consumer goods & retail (51%), energy utilities (41%)  and IT & telecommunications (41%). In the upcoming years, these sectors promise either stable growth or an increase in the number of transactions, thus providing private equity companies with the opportunity to acquire profitable targets. At the other end, a low number of PE transactions is expected in the building/construction and automotive sectors, particularly hit by the financial crisis.
 
 
Analyzing deal sizes, large transactions exceeding EUR 500 million will most likely remain the exception in 2013. The mid-cap segment is hence forecast to dominate, as 91% of the respondents expect most deals to have enterprise values of less than EUR 250 million and 59% even below EUR 100 m. This is not very surprising however, since many of the deals are expected in the CEE area, where values most often do not exceed these caps.
 
 
 
Regarding main growth drivers of the PE M&A activity, the economic outlook is considered to be the most relevant factor (26%), followed by the availability of attractive acquisition targets (25%) and development of the euro crisis and financial markets. With no significant changes expected in the economic outlook and the euro crisis, a substantial improvement to boost the sector could only come from renewed access to attractive acquisition targets and a slight improvement of the financial markets.

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COMMENT ON THIS ARTICLE:

  • Grisseida
    17.06.13 ora 18:55
    IbEDszaRWx

    a fost susținut și de către Ministrul britanic pertnu Afaceri Europene David Lidington cu ocazia vizitei sale de la Bucuresti, de la eenceputul lunii martie, ce2nd a declarat că „recunoaştem şi apreciem contribuţia


  • Samsam
    17.06.13 ora 18:54
    uIbjuCGABa

    Nice words but short on actions I do not beielve a word Mr. Lidington is saying. For example, the UK government officials and Tory MPs rhetoric against Romanians is sometimes bordering xenofobia and Mr. Lidington needs to address this. Another example: the populist stance to hold an referendum on how bad EU is so please give us a break.


  • Kristina
    17.06.13 ora 15:29
    YiFKjKYGfIHathIPR

    Love your city. Esp. love the pic with the gorgeous grreneey on either sides of the road! Beautiful...And ofcourse, love your outfit...Came here blog hopping and liked your blog!Do drop by my blog sometime.And do follow via GFC & FB, if you like and let me know with a comment! :)


  • Erick
    17.06.13 ora 15:29
    kieaVhltmBpmzpG

    I am so glad that you write in English so I can understand what you are sianyg.Wonderful photos, wonderful you Stella. Definitely I have to visit Bucarest one day. Cf3mo es que sabes espaf1ol?XXXXXXXXXXXXXXXXXXX





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