PPM Buy _ Build Monitor 2007 by dfhercbml


									  Friday 22 February 2008

                      IT WILL BE TOUGHER IN 2008

                   A buoyant M&A market and plentiful debt allowed
         Private Equity-backed companies to make a record number of
       follow-on acquisitions in 2007 – this will be hard to repeat in 2008

  A ten year study on the buy and build strategies of private equity owned
  portfolio companies in Europe, released today by PPM Capital, the mid-
  market private equity firm, in conjunction with Mergermarket, has found
  that 2007 saw a record number of 385 follow-on acquisitions (“Builds”) by
  private equity-backed businesses (“Buys”). The 385 transactions represent
  more than a 10-fold increase on the number completed in 2000. Two high
  profile examples are the restaurant group Tragus that acquired Ma Patter’s
  and Strada and leisure group Merlin Entertainment that in 2007 bought
  Madame Tussauds to add to its Gardaland, Aquatica and Legoland

           No. of follow-On Acqusitions ("Builds")* by PE-backed firms ("Buys")



 200                                                                   165

 100                                                             82
                                           45         43
  50                            33
           5         15
         1998       1999       2000       2001       2002       2003   2004   2005   2006   2007
* Builds w orth more than €5 million or w ith >€10 million of sales
Commenting Neil MacDougall, Managing Partner of PPM Capital said:
“We have seen the continued growth of buy & build strategies in recent
years, with 2007 representing a peak in both the volume and speed of
follow-on investments by private equity-backed portfolio companies.
Undoubtedly some of this simply reflects the strong M&A market in the first
half of last year, but given the current debt market conditions, we predict
that 2008 will be the year of focus on portfolio companies generally.”

“If private equity firms are to continue to achieve their target returns in
turbulent times they will need to concentrate on creating value within their
portfolio companies by using their expertise to manage and grow those
businesses. One of the key ways to do this is via a buy and build strategy.”

“Historically many follow-on deals were funded with debt so the current
turmoil in the debt market will make the pursuit of buy and build
transactions harder. Portfolio companies that are not over-leveraged and
have a small and supportive bank syndicate may still have capacity to
pursue an acquisition strategy. However, newer portfolio businesses with
higher leverage, or older deals that were refinanced to repay their
shareholders, may not be able to use debt to fund buy and build
transactions. Clearly private equity houses may choose to fund follow-on
deals with equity but for businesses with less debt capacity they may have
to be more creative and work with trade buyers by merging businesses or
forming joint ventures as a means to create value.”

For further information please contact Equity Dynamics:
Jane Kirby, 07825 326 441
Corinna Vere Nicoll, 07825 326 440
Notes to Editors
PPM Capital is a leading source of private equity finance for mid-market
transactions. An established office network operates in London, Munich, Paris
and Chicago with 26 local investment professionals.

Although PPM´s investment portfolio is broadly based, the firm has established a
reputation for its expertise in the healthcare, retail, leisure, business and financial
services sectors and a number of successful investments have recently been

Recent Investments
€176.5 million acquisition of orizon AG from GL Aktiengesellschaft in 2007
GBP107.5 million acquisition of Paramount Restaurants from Starlight in 2006
GBP183 million acquisition of Azzurri Communications from 3i in 2006
€230 million acquisition of Histoire d´Or from Apax-Partners in 2006
€320 million acquisition of Jost Group from Alpha Investors in 2005
Acquisition of BST Safety Textiles from Mr. Johann Berger in 2005

Recent Divestments
€1.3 billion sale of Phadia to Cinven in 2007
Sale of BST Safety Textiles to the WLRoss Group in 2006
Sale of OREFI Participation to Investcorp in 2006
€190 million sale of Upperpoint Distribution to Close Brothers PE in 2005
€393 million sale of Barracuda Group to Charterhouse Capital Partners in 2005
€765 million sale of Astron Group to RR Donnelley in 2005
€345 million sale of Finnish Chemicals to Kemira Oyj in 2005

Recent Awards
Real Deals/BVCA Private Equity Awards 2007: Large Deal of the Year Award
ACQ Finance Awards for Excellence 2007: Large Deal of the Year (Phadia)
ACQ Finance Awards for Excellence 2007: German Private Equity Firm of the
European Venture Capital Journal 2006: Buy-Out Realisation of the Year by
Trade Sale (Astron)

PPM is committed to adding value to portfolio companies and has an extensive
track record of successful portfolio management. ´Buy and Build´ transactions are
designed to support the growth of portfolio investments through strategic

To top