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The data have been released by The Centre for Management Buy-out Research (CMBOR), a provider of analysis on the UK buy-out market founded by Barclays Private Equity and Deloitte.

Tom Lamb, co-head of Barclays Private Equity, said that the numbers were relatively encouraging after the 60 per cent decline in buy-out activity in Q4 2007.

“Although the first quarter is traditionally a quiet part of the year, UK buy-out activity so far in 2008 compares well with prior years. This is in part driven by vendors rushing to complete deals before the end of CGT taper relief at the end of the tax year,” he added.

He said that it was good to see the UK buy-out market operating at these levels of activity, but added that it remained to be seen whether this would continue into the rest of the year or whether this would prove to be a false dawn because the CGT changes had pulled forward deal flow from later in the year.

Mark Pacitti, corporate finance partner at Deloitte, explained that a shuffling of the industry sector order was indicative of the wider change in the economy. 

He pointed out that the retail, leisure and food and drink sectors had driven deal flow in recent years, reflecting buoyant consumer confidence. 

In 2007 these consumer sectors accounted for 20 per cent of buy-out values, or 40 per cent including Alliance Boots. 

So far in 2008, consumer deals have fallen to less than 5 per cent of total deal value. 

The top performing sectors in Q1 2008 are Business Services (30 per cent), Manufacturing (21 per cent) and TMT (18 per cent).

Pacitti added that there had been a question mark over whether the secondary buy-out market would collapse, with the credit crunch in full force. 

The Q1 figure of £1.6bn is down relative to the same period last year of £2.1 billion. 

With full year SBO activity having peaked at nearly £15 billion in 2007, Pacitti said that we were now back to 2005/2006 levels of £8-9 billion per annum. 

“Looking at Public-to-Private activity, we have only recorded four deals so far this year, so we are unlikely to repeat the full year numbers achieved in 2006 and 2007 of 24/25," he concluded.

Quarter 1 2008 has so far seen four deals over £250 million, three of which were over £500 million, but no £1 billion-plus deals.

In contrast deals between £10 million and £250 million provided around half of the total value.

Secondary buy-outs and public to private deals remain the largest sources of buyouts by value, respectively at 38 per cent and 41 per cent of total activity.

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Related links

• The Centre for Management Buy-out Research (CMBOR)