Buyouts back in style

Merger and acquisition (M&A) activity is on the rise across Western Europe - a turnaround from the dismal years following the dot-com bust.

Across Europe buyouts in 2004 should have a total value of €97.5bn, an increase of 44 per cent year-on-year, according to the Private Equity Deal Forecast. The research comes from UK trade journal Private Equity Europe and the Calyon Corporate and Investment Bank.

The UK accounts for the largest portion of any country - about a third of the total value - but is seeing less growth than the Continent.

M&A activity in the UK is expected to rise 33 per cent in 2004 while Germany and Spain should see growth of 115 and 116 per cent respectively.

Lyndon Driver, editor of Private Equity Europe, said in statement: "In line with the trend over the last five years, the Continent is continuing to boost its share of the European buyout market at the expense of the UK."

However, this is not a trend that is necessarily going to continue over the next five years, according to Richard Moon, editor of UK private equity journal Unquote and developer of the model used to generate the figures.

Moon told silicon.com: "Because of the [corporate] regulation in France and German - and the hold labour has over business there - I think more deals will start occurring in the UK again. It all depends on laws within France and Germany."

Looking ahead to 2005, Germany is forecast to be the growth leader with a 53 per cent rise in buyout values.

Deals in the UK, Spain and France (whose M&A activity was nearly flat between 2003 and 2004) are expected to grow by roughly one third next year.

Moon believes it's safe to call the increase in buyouts a turnaround and added that going forward "it will be interesting to see if private equity can continue to maintain the growth rate of M&As that we've seen over the last 2 or 3 years".