Buyouts dip to lowest for six years

THE management buyout market suffered its lowest third quarter since 1986, according to figures from KPMG Peat Marwick, the accountants and management consultants, writes Roger Trapp.

There were only 12 MBOs rated as large, or valued at more than pounds 10m, worth a total of pounds 298m in the three months to the end of September. This compares with 15 MBOs worth pounds 550m in the previous quarter and 12 worth pounds 420m in the same period last year.

However, Chris Beresford, KPMG's head of MBOs, predicts the market is ready to recover. 'It is just waiting for the wind to change direction,' he said.

He added: 'Management teams are still keen in principle to buy out companies, but are being put off by the unrealistic prices still being set by many vendors.'

Because managers had seen the serious effects of the recession on over-geared companies, they were refusing to complete deals at prices they felt did not reflect the current economic climate. 'Despite the excitement of the high incidence of successful flotations by MBO companies and the trade sale of Parker Pen, management teams are still wary,' he said.