MBO bonanza breaks records

Accountants are benefiting from an unprecedented boom in the number of management buyouts that have taken place.

More than #2.5bn worth of deals were carried out in the first quarter of 1998, according to a survey by KPMG Corporate Finance. The value of larger MBOs beats last year’s first quarter record of #1.9bn – a 31% increase in value on the first quarter of 1997.

The average size of MBOs completed so far this year was #73m, also a record compared with #54m deals in the same period of 1997.

Mike Stevens, head of MBO at KPMG Corporate Finance, said: ‘There are two drives towards this trend. First there is a lot of money going into private equity at the moment, because of the successes of MBOs over the last decade. And as major companies focus more on their core business interests, their subsidiaries come up for sale.’

Stevens claimed accountants are leading the way in this field: ‘Accountancy firms are all over this, because if they put the deal together, they’ll hopefully get the audit and will handle eventual flotation. Investment banks have tended to neglect this area because of the high risk involved.’

Despite this, investment banks and other venture capital firms still put together the most MBO deals, says a survey by Acquisitions Monthly. Its MBO league table for 1997 shows 3i on top, with 63 deals worth #439m under its belt. Cinven, which led the #860m buyout of IPC Magazines in February, completed just seven deals last year, but they valued a total of #437m.

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