More than a third of management buyouts in the UK since the start of the year occurred at companies in administration, as private-equity firms target failed businesses. Private equity firms with cash and those less reliant on debt have been particularly successful in this regard.

Research on the first quarter of 2009 by the Centre for Management Buyout Research (CMBOR) shows companies in administration surpassed family-owned and closely held businesses as a source of management buyouts for the first time since CMBOR began gathering data in 2000.

Since the start of the year, of 61 management buyouts in which managers of a company bought the company they work for — usually with the help of private-equity funds — 38% involved companies in receivership. This compares with 11% for the whole of last year and 5% in 2007

These deals, which tended to be smaller in size, constituted 14% of all management-buyout deal value, which is £1.95 billion ($2.84 billion) so far this year. Although about half of management buyouts are private-equity backed, CMBOR said, these transactions make up the vast majority of total deal value.

Conversely, family-owned and closely held companies were the source of 28% of deals in the first quarter, compared with 42% last year and 41% in 2007. Secondary buyouts fell to just 7% from 19% last year.

Of the £1.95 billion in total value of the 61 UK management-buyout deals, two-thirds was from one deal: U.K. buyout house Permira Advisers LLP, News Corp. and NDS Group PLC taking television-technology company NDS private. It has been the slowest quarter by number of deals since records began in 1990.

In the final three months of 2008 there were 92 deals worth a total of £1.3 billion, and in the first quarter of last year there were 152 deals worth a total of £7.5 billion.

If the market continues at this pace it will be the slowest year by management buyout volume since 1981, when there were 152 deals worth a total value of £267 million. It would also be the slowest year by value of deals since 1995 when there were 598 deals worth a total of £5.6 billion.

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