Silverfleet Capital, in conjunction with mergermarket, today publishes the findings of its European Buy & Build Monitor for H2 2013. The Buy & Build Monitor tracks add-on activity undertaken by European companies backed by private equity.
129 add-ons were reported in H2 2013 compared to a H1 number of 141, which has been revised upwards from 124. Further data for smaller Buy & Build transactions usually emerges well after the publication of this report. Therefore, based on our experience, the number of deals in H2 2013 is very likely to be revised upwards in our next report possibly at the expense of the average reported deal size. However, we conclude that activity levels will ultimately have been at least level if not slightly up in the second half of 2013.
The average disclosed value of add-ons in the final quarter, based on the 15 deals with disclosed values reported in that period, was markedly higher, increasing by 56% to £84m from £54m for the first three quarters of 2013. The annual average values for add-ons in 2013 and 2012 are £62m and £46m respectively.
The largest of the deals in the half year was PAI-backed Swissport’s €450m purchase of Servisair UK, announced in August 2013. However the increase in average deal values in Q4 2013 is explained by three noteworthy transactions in the final quarter of 2013: The CAD 650m purchase of Maxxam Analytics by Bureau Veritas, Guardian Financial’s €350m acquisition of Ark Life, and Aenova’s acquisition of Haupt Pharma for €260m. Bureau Veritas, Guardian Financial and Aenova are backed respectively by: Wendel, Cinven and BC Partners.
Commenting on the findings, Neil MacDougall, managing partner of Silverfleet Capital said: “During the final quarter of 2013 there was a very noticeable increase in transaction size, with the average deal size at £84m being the highest since Q1 2011. However, the indications are that the overall number of add-ons will have remained broadly flat compared to the first half of 2013.
Looking in more detail at how two of the larger transactions were financed, Swissport issued a $390m senior secured add-on note while Aenova raised a €130m additional term loan. Together these deals demonstrate the keen appetite of both the European high yield and senior debt markets to support large add-ons by private equity-backed companies.”