All the Facts and Figures on the Ins and Outs; Professor Mike Wright and Rod Ball, Centre for Management Buyout Research
Byline: Mike Wright
CMBOR, which celebrates its 25th anniversary this year, was established as the first buyout wave accelerated from recession based job-saving deals to more strategic divestment transactions. Deals were primarily management buyouts (MBOs) where incumbent managers acquire ownership of a firm. Management Buy-ins (MBIs) subsequently emerged where a new external management team acquired ownership. In both, management invest own funds to acquire significant ownership, with other funding provided by a private equity firm alongside borrowings.
The later advent of much larger deals saw private equity firms leading the transaction and taking majority equity stakes.
The 1990s began with the buyout market in recession, but emerging from recession the market rose continuously through the remainder of the decade. After falling back after the collapse of the dot.com boom, the market set out on a buying spree fuelled by favourable economic conditions, plentiful supplies of deb and the raising of mega-private equity funds. The market subsequently peaked at a record pounds 46.6 billion in 2007.
Over this period, there was a marked reduction in MBOs, while MBI and private equity led deals rose both in volume and especially in value terms.
By end 2008, following severe tightening of credit supply and entry into recession, market value had more than halved to pounds 19.7 billion. Value then declined to pounds 5.6 billion in 2009, but recovered in 2010 to pounds 19.1 billion. …