Big deals pull MBO market out of two-year nosedive

Scottish & Newcastle's £2.5bn pubs sale and the £1.7bn private equity-backed bid for Debenhams have helped pull the management buyout market out of a two-year nosedive, leading experts to predict a recovery in the number and value of deals in the coming year.

The Centre for Management Buyout Research, part of Nottingham University Business School, will today reveal that MBOs worth £14.5bn have been completed so far in 2003, compared with £15.3bn for the whole of last year. With three weeks to go until the end of the year, the full total is expected to at least equal that of 2002.

The study, sponsored by Deloitte & Touche and Barclays Private Equity, shows that after falling substantially for two consecutive years, the buyout market has now levelled out. This suggests an upturn in confidence among entrepreneurial management and their financial backers.

Mark Pacitti, a private equity partner at Deloitte & Touche, said: "With a promising fourth quarter and a number of big deals in the pipeline, including Weetabix and Inmarsat, there are encouraging signs that the upward trend should continue in the New Year"

Tom Lamb, the managing director of Barclays Private Equity, said the last quarter of the year would prove to be the strongest for management buyouts for two and a half years.

"However, while this is clearly encouraging, it should be noted that the figures have been skewed by two mega deals, the S&N pubs sale and the bid that took Debenhams private," said Mr Lamb. "In fact the overall market continues to be propped up by the mid-market, especially the £25m-£100m range which has grown by more than 20 per cent this year."