Recent research conducted by Clearwater International has revealed that the total number of private equity deals in 2016 was up 18% on 2015, with the majority of the transactions completing in the second half of the year, post the Brexit vote. The upcoming 2016 Heatmap Review, in association with unquote”, shows this was driven by significant increases in activity in DACH (up 56%), Southern Europe (up 45%) and France (up 19%) with stable deal volumes in other European territories.
Clearwater International was also pleased to disclose that its work with private equity reflected this trend, with the number of deals involving a private equity acquirer or vendor increasing by over 40% (a 150% increase in total deal value). Transactions were completed with 52 different private equity funds, across 16 different countries.
The Heatmap Research shows significant uplift in activity in the industrials and chemicals, and consumer sectors, which together accounted for c.50% of deal volumes across Europe, also revealing a slight increase in average multiples to 10.3x (up from 10.0x in 2015). This increase is being driven by rising valuations in Southern Europe, the Nordic region and CEE area.
Clearwater International has also carried out research on domestic versus cross-border private equity activity, and on North American-based private equity funds investing in Europe. During 2016, as expected the majority of deals by private equity funds across Europe were domestic (c.60%) in line with 2015. However, despite increasing activity in DACH and the Nordic region, the North American private equity funds market declined to only 11% of deal volume in 2016 (down from over 14% in 2015). The UK Eire region continued to be the most attractive geography for North American funds to invest in.
At Clearwater International, we saw similar trends with 65% of our private equity transactions being domestic. Industrials and chemicals continued to be our most active sector with 13 of the 53 deals completed, and the UK and Eire region accounting for half of our private equity transactions. We also saw increases in the deal volumes in DACH with the region completing c.18% of our private equity transactions.
Across Europe, 10 of our transactions were advising private equity funds on exiting a portfolio company, and we also completed 10 transactions supporting either the private equity fund or management on an acquisition and 9 refinances of private equity portfolio companies.
At Clearwater International we are seeing continued high levels of private equity activity in all regions and anticipate increased activity levels from North American private equity funds in 2017.