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M&A Mid-Market: What After The Credit Crunch? November 2007 7 th M&A Mid-Market Forum, Paris. David Bernard Vice-President, Investment Banking & Private Equity david.bernard@thomson.com. Has European M&A Activity Peaked?.
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M&A Mid-Market: What After The Credit Crunch? November 2007 7th M&A Mid-Market Forum, Paris David Bernard Vice-President, Investment Banking & Private Equity david.bernard@thomson.com
Has European M&A Activity Peaked? Announced M&A Transactions with European Target, Total Deal Value and Number of Deals, by Announcement Date 20.1% 24.7% 25.2% 29.1% 16.8% 29.7% 17.0% 18.5% 16.6% 17.9% 20.1% 16.6% 16.7% 16.4% Source: Thomson Financial
The Credit Crunch Has Had An Impact on European M&A and Private Equity Activity Announced M&A Transactions with European Target, Total Deal Value and Number of Deals, by Announcement Date Source: Thomson Financial
Debt Financing at a Standstill European Leveraged Syndicated Loans, Total Deal Value and Number of Issues European High-Yield Bond Issues, Total Deal Value and Number of Issues Source: Thomson Financial
IPO Activity in Europe Has Slowed Down in Q3 2007 European IPO Activity Source: Thomson Financial
European M&A Deal Volume Has Been Most Affected for Large Deals Total Deal Value by Deal Size, Announced M&A Transactions with a European Target Source: Thomson Financial
Similarly, European Mega-Buyout Transactions Have Virtually Disappeared in the Last 3 Months Total Deal Value by Deal Size, Announced Leveraged Buyout Transactions with a European Target Source: Thomson Financial
Global Fees Generated from LBOs Had Surpassed Private Equity Exit Fees in 2006 Source: Thomson Financial / Freeman & Co
But Fees on PE-Backed Transactions Have Dried Up Post-Summer 07 Global Investment Banking Fees Generated for Private Equity Backed Transactions (M&A, Equity Issues, Bond Issues, Structured Finance, Syndicated Loans Issues) Source: Thomson Financial / Freeman & Co
Listed Companies Remain Affordable On Average Evolution of P/E Ratios, European public equity marketsForward values based on aggregate mean broker estimates • P/E Ratios in the European stock market have been around 15 for the last 3 years • Brokers anticipate earnings to grow more rapidly that stock prices, leading to a target P/E of 11.3 in 3 years’ time Source: Thomson Financial
And Acquisition Premia Have Stabilised at an Historically Low Level Average Price Premium (Offer vs. Price 4 Weeks Prior to Announcement) for European M&A Transactions Source: Thomson Financial
Cash Is Still King – For How Long? Consideration Analysis for European M&A Transactions Source: Thomson Financial
Conclusions • Mid-Market Activity Stable • Fundamentals Still Strong • The Right Deals Get Done • Less Competition for Strategic Buyers • Consolidation at Play in Many Sectors • Larger Players (Banks, PE) Coming Back to Mid-Market • Pressure on Fees?