1. Mike Wright, Imperial College
© Imperial College Business School
Latest Private Equity Trends
1
Equistone Partners Europe, Birmingham Breakfast Seminar, Feb 6, 2014

2. • Trends
– UK, Europe, Midlands
– Values and numbers
– Regional Differences
– Vendor sources
– Industrial sectors
– Deal structures and Pricing
– Fund raising
– Exits
• Prospects
Introduction
© Imperial College Business School
Latest Private Equity Trends
2

3. © Imperial College Business School 3
UK PE-backed Buyout Market
Eases (£m)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
50000
0
50
100
150
200
250
300
350
400
450
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Value£m
Number
Number Value £m

4. © Imperial College Business School 4
Mid-market
(PE-backed £50-250m)
0
1000
2000
3000
4000
5000
6000
7000
8000
0
10
20
30
40
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70
80
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Value£m
Number
Number Value £m

5. UK Quarterly Trend Stays Flat
0
5000
10000
15000
20000
25000
0
50
100
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200
250
2003I
2003IV
2004III
2005II
2006I
2006IV
2007III
2008II
2009I
2009IV
2010III
2011II
2012I
2012IV
2013III
Value£m
Number
Number Value £m

6. Major European Markets Rise
0 10000 20000 30000 40000 50000 60000 70000 80000
France
Germany
Italy
UK
2007 2008 2009 2010 2011 2012 2013

7. Midlands Quarterly Trends
0
500
1000
1500
2000
2500
3000
0
5
10
15
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25
30
35
40
45
2003I
2003IV
2004III
2005II
2006I
2006IV
2007III
2008II
2009I
2009IV
2010III
2011II
2012I
2012IV
2013III
Value£m
Number
Number Value £m

8. © Imperial College Business School 8
PE-Backed Regional Deal
Numbers (Head Office)
0
20
40
60
80
100
120
140
Midlands South North Scot, Wales, NI
2008
2009
2010
2011
2012
2013

9. © Imperial College Business School 9
PE-Backed Regional Deal
Value (Head Office)
0
2000
4000
6000
8000
10000
12000
14000
16000
Midlands South North Scot, Wales, NI
2008
2009
2010
2011
2012
2013

10. All Midlands Deals
Value Flat But Volume Down
0
1000
2000
3000
4000
5000
6000
0
20
40
60
80
100
120
140
160
1987
1989
1991
1993
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2011
2013
Value£m
Number
Number Value £m

11. Midlands Share of all UK MBO/MBIs
0
5
10
15
20
25
30
35
No. %
Value %

12. UK Top End Volume Recovery
(over £100m)
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
0
10
20
30
40
50
60
70
80
1987
1989
1991
1993
1995
1997
1999
2001
2003
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2007
2009
2011
2013
Value£m
Number
Number Value £m

13. Midlands Deals above £100m decline
0
1000
2000
3000
4000
5000
6000
0
1
2
3
4
5
6
7
8
9
10
1991
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Value£m
Number
Number Value £m

14. Largest Midlands Deals
Buyout Name Vendor Deal Value (£m)
Busy Bees Knowledge Universe
Education (USA)
220
Aurum Holdings Landsbanski 175
Whitworths Holdings SBO (European Capital) 90
Kee Safety International SBO (LDC) 90
32.2 WM Wymeswold
Solar Power Plant
Private 44
City Link Rentokil 40
Acenta Steel Endless 38
Meter Provida Fusion group 38
In 2012 there were 6 £70m plus Midlands Deals

15. Midlands – The Last Decade
Number Value
East Mids West Mids East Mids West Mids
2003 63 70 1629 4007
2004 61 77 1777 1057
2005 64 57 547 982
2006 47 70 1541 3723
2007 66 68 1374 2526
2008 38 50 1563 811
2009 27 37 150 248
2010 33 22 971 853
2011 22 39 231 1345
2012 30 29 477 385
2013 26 25 416 486

16. © Imperial College Business School 16
All UK Vendor Source
(Number %)
0
5
10
15
20
25
30
35
40
45
ForeignDivestment
Insolvency
LocalDivestment
Private
PublictoPrivate
SecondaryBuy-out
Number%
2009 2010 2011 2012 2013

17. © Imperial College Business School 17
PE-backed SBOs
(Number & Value £m)
0
2000
4000
6000
8000
10000
12000
14000
16000
0
20
40
60
80
100
120
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Value£m
Number
Number Value £m

18. © Imperial College Business School 18
SBO Value Exceeds Other
Buyouts for first time (£m)
0
5000
10000
15000
20000
25000
30000
35000
1989
1992
1995
1998
2001
2004
2007
2010
2013
Value£m
Other Value £m SBO Value £m

19. © Imperial College Business School 19
SBOs vs Other Buy-outs
(Numbers)
0
100
200
300
400
500
600
700
800
1989
1992
1995
1998
2001
2004
2007
2010
2013
Number
Other SBOs

20. • Generally arise where primary buyout
performance relatively weaker and held longer
• SBOs on average perform worse than primary
buyouts, divisional & FF buyouts
• Positive effects of SBOs achieved by expansion
not increased efficiency.
• BUT……SBOs between specialized PE firms do
perform better
Care with Secondary Buyouts?
sustain performance?

21. 0
5
10
15
20
25
30
35
40
45
50
Family Foreign Local P2P Creditor SBO
UK
Midlands
UK & Midlands 2013
Vendor Sources – % by Numbers

22. 0
10
20
30
40
50
60
Family Foreign Local P2P Creditor SBO
UK
Midlands
UK & Midlands 2013
Vendor Sources – % by Value

23. 0
20
40
60
80
100
120
140
160
180
200
2007
2009
2012
2013
© Imperial College Business School 23
UK Industry Sectors
(Numbers)

24. © Imperial College Business School 24
Midlands Sectors
Deal Numbers
Sector 2011 2012 2013
Bus. & Support
Services
13 12 5
Financial Services 3 1 0
Food and Drink 2 2 1
Healthcare 2 4 2
Leisure 5 6 5
Manufacturing 17 19 14
Other 9 3 6
Paper,Print,Publish 0 2 0
Property &
Construction
1 2 3
Retail 5 6 5
TMT 3 0 9
Transport & Comms 1 2 1

25. © Imperial College Business School 25
Midlands Sectors
Deal Values
Sector 2011 2012 2013
Bus. & Support
Services
148 198 240
Financial Services 6 2 0
Food and Drink 3 17 90
Healthcare 127 222 4
Leisure 10 95 40
Manufacturing 399 115 128
Other 112 42 125
Paper,Print,Publish 0 152 0
Property &
Construction
38 4 6
Retail 685 12 184
TMT 46 0 46
Transport & Comms 2 5 40

26. © Imperial College Business School 26
Debt Available
(Deal Structures Above £10m)
0
20
40
60
80
100
120
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
%
Debt Equity LoanNote Mezzanine OtherFinance

27. Collateralised Loan Obligations issuance

28. COV-LITEThe Return of Cov-Lite Loans

29. 0
2
4
6
8
10
12
14
16
18
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
10-100m
above
100m
Entry EBIT Multiples for UK
Buy-outs Increasing

30. © Imperial College Business School 30
UK Fund Raising back to
peak levels
0
5000
10000
15000
20000
25000
0
5
10
15
20
25
30
35
40
45
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Value£m
Number
Number Value £m

31. © Imperial College Business School 31
PE Backed Exit Recovery
Continues
0
5000
10000
15000
20000
25000
30000
0
50
100
150
200
250
300
350
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Value£m
Number
Number Value £m

32. © Imperial College Business School 32
Mid-market exits accelerate
(PE backed, £50-250m entry value)
0
1000
2000
3000
4000
5000
6000
7000
0
10
20
30
40
50
60
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
Value£m
Number
Number Value £m

33. © Imperial College Business School 33
Flotations resurrected
0
20
40
60
80
100
120
140
160
180
200 CreditorExit
Floatation
SecondaryBuy-
out
TradeSale
Number
2005 2006 2007 2008 2009 2010 2011 2012 2013

34. Exits of Midlands Deals
0
5
10
15
20
25
30
35
40
45
50
CreditorExit
Floatation
SecondaryBuy-out
TradeSale
Number
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

35. © Imperial College Business School 35
Main Midlands Exits
Company Name Deal Year Exit Value
(£m)
Name of Buyer
Whitworths Holdings 2006 90 Equistone Partners
Kee Safety International 2011 90 Dunedin CP
Napier Turbochargers 2008 75 Wabtec Corp (USA)
Bionostics (Nav Bidco) 2008 68 Techne Corp (USA)
Optimum Care 2007 38 Four Seasons
Acenta Steel 2011 38 MBO
Practice Plan 2005 38 Wesleyan Assurance Society
Lil-lets UK 2006 37 Premier Foods (South Africa)
Eve Trakway 2006 28 Ashtead Group

36. Private Equity Prospects
• Large deal volume up though total value down
– Absence of mega deals
• Significant pending deals in 2014
– Domestic & General at £750 million
– Skrill £511 million
• More large deals expected

37. Private Equity Prospects
• Public to privates extremely quiet in 2013
• No large pending PTP deals
• Buoyant stock market
• Very quiet year for PTP in 2014

38. Private Equity Prospects
• IPO value of £9.8 billion highest on record.
• If stock and capital markets remain positive this
trend should continue through 2014.
• Trade sales increasing but still seems some caution
by corporates in converting increasing confidence
into action

39. Private Equity Prospects
• 2013 ended on a more positive note than it began.
• Debt levels rose last year and more relaxed debt
markets
• Buoyant exit and refinancing markets
• Increased UK based fund raising
• Large amounts of capital availability likely to fuel
return to growth in buyout market in 2014.