Private equity houses target consumer industries companies for public-to-private deals

Private equity houses have ranked publicly listed companies in the Consumer Industries sector (including personal goods, food and beverage and household items) as being the most conducive to private equity backed public to private deals over the next five years, according to a survey from accountants and business advisors BDO LLP.

The firm’s Public-to-Private survey reveals that when asked to consider which sectors will be the most conducive to public-to-private deals over the next 5 years, 82 per cent of private equity houses (PEHs) agreed this to be true of quoted companies in the Consumer Industries sector. This was followed jointly by Financial Services and Retail & Leisure, both being perceived as conducive by 76 per cent of PEHs. This comes as 94 per cent of PEHs are likely to consider public-to-private deals over the next two years, according to the survey.

Institutional Fund Managers (IFMs) ranked Media & Internet quoted companies as the most conducive to public-to private deals over the next five years. This was followed by companies in the IT and Retail & Leisure sector, with 58 per cent of IFMs perceiving them as favourable for public-to-private activities.

According to the survey, PEHs houses and IFMs thought the least conducive to public to private deals were publicly listed companies in Aerospace & Defence (PEHs 41 per cent and IFMs 32 per cent), Energy & Mining (PEHs 35 per cent and IFMs 26 per cent) and Autos (PEHs 18 per cent and IFMs 36 per cent).

The survey also revealed that 52 per cent of IFMs believe Institutional shareholders would  welcome a public to private transaction proposal while only 2 per cent said they were unreceptive to public-to-private deals and 2 per cent said they would be hostile towards this. The survey shows that nearly half the IFMs that responded (48 per cent) will/ may encourage investee companies to seek public-to-private funding within the next two years.

Alex White, corporate finance partner at BDO LLP said: “The City always used to be suspicious and somewhat sniffy about public-to-private deals but now fund managers want cash and are keen to receive takeover proposals.”

“Quoted companies are being starved of equity finance and so cannot fund takeover bids. That means private equity is the only game in town.  This is good news for the 48% of management teams who, if they had their time again, would not choose to float their company.” 
 
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Notes to editors:

For more information contact Stephanie Aneto in the BDO press office on 020 7893 3073, Email: stephanie.aneto@bdo.co.uk

About BDO:BDO LLP operates across the UK with over 3,000 partners and staff. BDO LLP is a UK limited liability partnership and the UK Member Firm of BDO International. BDO International is a world-wide network of public accounting firms, called BDO Member Firms, serving international clients. Each BDO Member Firm is an independent legal entity in its own country. The Belfast Firm is operated by a separate Partnership.

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BDO is an award winning firm.  Recent achievements include:
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• Business Superbrand - Business Superbrands 2008

Survey methodology
187 CATI interviews were carried out in September and October 2008. Interviews were carried out with 86 profitable smaller quoted companies (main board directors) with a market capitalisation of £15m - £250m, 51 Private equity providers and 50 Institutional Fund mangers who invest in this area.

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