More buyouts likely

With interest rates so low, it was probably no big surprise that Tom Rea tried to put together a management buyout of Clery's. The only problem is that the reported £19 million (#24 million) offer seems to be far short of what Clery's seems to be worth, based on the usual price to sales gauge.

But the willingness of Mr Rea to put together a MBO is a reflection of the low level of interest rates and what is likely to be an increased willingness of venture capitalists to support MBOs and company managements to consider buying companies from their owners or taking their companies private from the stock market.

Over the past few months, we have seen ICC's venture capital arm back the buyout of Jones's distribution businesses. We have also seen Apax's Pierce Casey join forces with Dermot Desmond to buy into Unidare and with Ronnie Wilson to buy into Lamont.

In turn, John McGuckian - reputedly Northern Ireland's richest man - has bought a load of Unidare shares, while Joe Moran and his fellow-directors have dipped into their pockets to buy large chunks of IWP at the going price on the market.

The key to this sort of corporate activity is the low ratings given to small companies, as institutions more and more focus their funds on the larger capitalisation companies. As NCB's Rory Gillen reported this week, the top 10 stocks on the Irish stock market are trading at more than 20 times forecast 1999 earnings.