Tighter bank lending 'to hit high-value buyouts'

The credit crunch could hit the number of high-value management buyouts in the Republic this year, according to one corporate financier, writes Barry O'Halloran.

David O'Flanagan, head of corporate finance at Deloitte, told The Irish Times yesterday that the number of such deals in the State in 2008 should be in line with previous years.

However, he added that tighter bank lending, used to finance most buyouts, could hit the number with a value of €100 million or more.

Figures from a survey conducted by Nottingham University's centre for management buyout research show that the value of management buyouts in the Republic plunged by 67 per cent last year to €440 million, from €1.36 billion in 2006.

At 13, the number of deals was just three down on the previous year's total of 16, but the average value of each was well down, at €33.8 million from €85.1 million.

The deal with the biggest price-tag was the Capfest-backed purchase of the Mater Private Hospital for €175 million.

Calyx Group was the only public limited company to be taken private in two years, in a deal worth €104 million.

Management's €70 million purchase of the A-Wear clothes shop chain from the Weston family was the biggest such transaction in retailing.

Mr O'Flanagan said there were signs of a slowdown in the rate at which deals were done in the Republic during the final quarter of last year, which he said indicated a tighter market for bank debt.

The report on Irish management buyouts is part of an overall European study carried out by the Nottingham University centre, which is sponsored by Deloitte and Barclay's Bank.