Private equity-backed takeovers stabilise in third quarter

The latest Buy and Build Barometer from Rickitt Mitchell has shown a slowdown in the number of private equity-backed bolt-on acquisitions in the third quarter, following consecutive record-breaking quarters earlier in the year.

Rickitt Mitchell’s barometer for Q3 2021 showed 125 bolt-on transactions, a fall of 25 per cent from Q2. Total deal value for the quarter, meanwhile, stood at £235 million, compared to the record high £2.3 billion recorded by Rickitt Mitchell in Q1 2021.

Despite these declines, bolt-on activity remains relatively high, with such acquisitions continuing to offer private equity companies the opportunity to bolster their portfolios, respond to the impact of COVID-19 and deploy the dry powder they’ve accrued during the pandemic.

Regionally, the South East was the busiest area for deal making, with 16 private equity bolt-on transactions in Q3, closely followed by London and the East of England, which both saw 14 deals. Yorkshire, meanwhile, outperformed other Northern regions, registering a record 11 transactions in Q3.

Rickitt Mitchell highlighted the growing role of cross-border transactions in the third quarter, citing two standout transactions involving foreign buyers: US firm Neighborly Inc’s £145 million acquisition of a 90 per cent holding in Pimlico Plumbers in September; and the £75 million takeover of Smoothwall Ltd by Australian outfit Family Zone Cyber Safety in August.

Rickitt Mitchell Partner Neil Mitchell (pictured above) commented: “While it remains a record year so far in terms of deal activity, a steadying of transaction flow has emerged as expected following a boom earlier in the year, as the market recovers from the impact of COVID-19.”

“Despite a slowdown compared to Q1 and Q2, Q3 transaction levels remain high, especially in comparison to the number of deals completed in 2019 and 2020. Activity also continues to move outside of London, with a particular surge in Yorkshire. This is further evidenced by the number of cross-border deals involving firms from Europe, Australia and North America.”


Read more about how private equity firms are using bolt-on transactions post-COVID-19 in this exclusive BSR insight.

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