Buyouts booming as failures fall

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The Independent Online
TWO sets of figures to be published today provide further evidence of economic recovery. They suggest that management teams are increasingly looking to buy their businesses and point to a fall in company failures, writes Tom Stevenson.

There was a sharp rise in the value of management buyouts completed between April and June this year, according to figures from the accountants KPMG Peat Marwick.

The number of bigger deals (over pounds 10m) was just one higher at 14 but the buyouts were worth a total of pounds 710m, an increase of more than 50 per cent over the same period last year.

Chris Beresford, KPMG's head of management buyouts, said: 'This pick-up is encouraging. But, while managers are prepared to invest in their own businesses, we still cannot report a rush of deals completing.'

He added that while economic indicators pointed to this being a prime time for buyouts, vendors' price expectations had firmed quickly.

Largest deal during the period was the pounds 273m buyout of BP's consumer products division, formerly a part of BP Nutrition. Other big deals included Thorn Lighting ( pounds 162m), Leyland-Daf Trucks and Vans ( pounds 35m and pounds 46m) and Maiden Outdoor Advertising ( pounds 21m).

Over the past 13 years there has been a marked increase in the number and value of management buyouts. In 1980, 100 deals were worth pounds 40m. Last year the comparable figures were 520 buyouts totalling more than pounds 3bn.

Company failures slowed for the third successive month in June. Statistics from the London and Edinburgh Gazettes show that 232 appointments of receivers or administrators were recorded, down 43 per cent from the same month last year.

An average of 55 appointments have taken place each week in the past three weeks, half the rate seen in 1991. Touche Ross, the insolvency practitioner, said this trend suggested that fewer than 3,500 firms would have gone under in 1993, well down on the 5,100 recorded last year.

London and South-east England bore the brunt of company failures last month, 45 per cent of the total. The share of the North-west is also up. Wholesalers proved most vulnerable, with other sectors suffering less in comparison with recent months.