Take-Private, Bolt-On Deals Provide Shelter From Underperforming European Markets

European private equity (PE) dealmaking defied economic headwinds in 2022.

In general, dealmaking was characterized by smaller but more numerous deals, as checks and valuations got smaller and the cost of borrowing increased.

As Pitchbook’s annual European PE Breakdown reveals, both deal count and total deal value increased in 2022 compared to 2021, proving the resilience of the continent’s private investment activity despite volatile public markets.

Some of the year’s winners include private investors who were able to take public businesses private after their stock market valuations plummeted.

For example, in the biggest European take-private of the year, the Benetton family and Blackstone acquired Atlantia, an Italian holding company for transport infrastructure that was snapped up for €19 billion following several years of troubled stock market performance.

A similar trajectory can be observed in the case of Stagecoach, a British transport operator that was taken private last year after its share price nosedived nearly 80% between December 2019 and the last quarter of 2021 when takeover talks began.

In March 2022, Stagecoach was acquired by DWS’ infrastructure fund after the German asset manager beat rival transport firm National Express to close a deal worth £595 million.

Overall, Pitchbook reported that 2022 was the second-most active ever for public-to-private deals in Europe, valued at €37.3 billion spread across 31 deals.

Record Year for Bolt-On Acquisitions

Another major trend of the year was bolt-on acquisitions, a type of deal in which a larger company or PE manager looks to leverage business synergies by acquiring smaller companies in the same sector. As a percentage of all buyouts, 2022 was a record year for these types of deals, which represented 67% of the total yearly deal count and 45.7% of total deal value.

Typically, private equity players favor bolt-on acquisitions in periods of market downturn, as they allow the larger acquiring company to continue growing, while they can pick up smaller companies for less than they would pay in more robust market conditions.

For example, U.S. retail group Authentic Brands Group (ABG) announced in August the acquisition of U.K. fashion brand Ted Baker in a deal valuing the company at a highly discounted $253 million.

The fashion conglomerate, which already owns brands such as Reebok, Nautica and Eddie Bauer, said in a statement at the time that it will use the acquisition to accelerate Ted Baker’s growth in North America.

The U.S. firm added that it is considering combining the British retailer’s stateside operations with those of SPARC Group, a retail, eCommerce and wholesaling joint venture ABG co-owns with shopping mall operator Simon Property Group.

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