Private equity deals have continued to dry up in the wake of the credit crunch, with the value of buyouts worldwide tumbling to a four-year low during the last quarter.
Global buyouts plunged to $62.1bn between April and June, down 83 per cent on the corresponding period in 2007, according to data provider Thomson Reuters. The decline marks the end of six years of growth.
Private equity groups thrived in the recent debt boom, buying companies and loading them up with debt to create instant returns. The British Venture Capital Association, the industry trade body, released a report yesterday that showed UK based private equity firms had invested £31.6bn last year, up from £21.9bn the previous year.
Yet the onset of the credit crunch last summer has seen the availability of cheap debt vanish, forcing buyout firms to target smaller deals.
European deals have fallen by two thirds to $60bn in the last quarter. The largest agreed buyout was for Expro International, the oil services group, which was targeted by a consortium of private equity investors led by Candover, who bid $3.8bn. The largest European buyout in 2007 was Kohlberg Kravis Roberts' takeover of Alliance Boots, which was over $20bn.
The Expro takeover looks more likely to complete after it was yesterday approved by the High Court. The company warded off an attempt by a group of hedge fund investors to delay the deal as they looked to encourage rival bidder Halliburton to return to the table.
Separately, Thomson Reuters also found that the decline in general mergers and acquisitions has seen investment banking advisory fees crumble. Goldman Sachs earned $1.7bn from advising on deals in the first half of 2007, making it the highest earner among its competitors. It remains at the top of the table, but so far this year has earned $241m.