Trade sales continue to offer a viable exit route, in particular for the bigger assets, as the average trade sale value this quarter, at €200m, was the highest since the last quarter of 2012. This is consistent with the findings of the latest EY Global Capital Confidence Barometer (CCB), a survey of more than 1,600 executives, suggesting that increasing deal value could be the M&A story of the next 12 months. Companies’ intentions to engage in larger deals (greater than US$500m) over the next year were up strongly in the survey, having doubled in 12 months.
The €3.1b trade sale of German manufacturer Grohe, the second-largest exit this quarter, went to joint Japanese buyers Lixil and the Development Bank of Japan. The trade sale of Spanish consulting firm Everis went to Japanese buyer NTT Data.
The strong interest of overseas buyers for European assets (6 of the 10 largest trade sales in Q1 2014) is a sign that companies are looking at balancing investment in emerging and mature markets. Emerging markets remain very important — BRICs for medium-term growth and non- BRICs for longer-term growth. However, developed markets are critical for precious short-term growth. The resurgence of mature-market investment intentions is evidenced by the CCB respondents’ desire to invest in the US, UK and Germany.
“ A large proportion of trade sale exits have originated from Asian and US buyers, with fewer European-based buyers emerging. This, perhaps, points to continued Eurozone volatility and domestic investors feeling less confident about investing large amounts of capital for assets.
“ US and Asian buyers have an appetite for European assets, which are viewed as a strategically important footprint in one of the largest single market economies in the world. It is worth noting, however, that only 3 of the top 10 exits for this quarter came from the Eurozone, with two deals from Germany and one from Spain.“
Sachin Date, EMEIA Private Equity Leader, EY
Courtesy of EY