Buyout Highlights: Overview of Western European Buyout and Financing Trends FY21

Report 24 January

Buyout Highlights: Overview of Western European Buyout and Financing Trends FY21

Mergermarket has partnered with Debtwire Par to produce a comprehensive overview of Western European Buyout and LBO financing trends.

Key Trends in FY21:

  • Private equity deal value nearly doubled from last year (EUR 127.1bn, 996 deals) and accounted for 31.1% of the overall value generated across M&A in Western Europe.
  • The number of private equity transactions has also seen record figures with 1,605 deals, a 61% increase in volume from last year (996 deals in FY20).
  • The median all-sector buyouts EBITDA Multiple for 2021 stands at 12.8x, slightly higher than in the previous year (12.3x in 2020).
  • Leveraged loans backing buyouts set a new annual issuance record of EUR 66.5bn (excluding direct lending transactions) in 2021, with issuance improving 85% on a year-over-year basis, while high yield bonds backing LBOs saw volume increase 97% from the 2020 figure to EUR 15.5bn.
  • Notably, larger deals such as Medline Industries (EUR 6.77bn) and Stockholm Exergi Holding (EUR 6.10bn) made up a larger share of issuance in 2021, helping to push the share of loan deals with a size of EUR 1bn or greater to 25%, its highest share in the last several years.
  • First lien institutional loan pricing on LBOs moved up to an average margin of 446bps in 4Q21 from just 375bps the first quarter and an average OID (original issue discount) of 73bps, compared to 40bps. High yield bonds similarly moved up from historically tight pricing, ending 4Q21 at 5.31%, compared to 3.98% in the first quarter.
  • The tech sector saw 488 deals worth EUR 49.2bn, a steep jump from last year’s figures (254 deals worth EUR17bn in 2020). With 9 transactions valued above EUR 1bn, the consumer sector recorded EUR 42.9bn in buyout value across 142 deals, a 181% rise in value compared to 2020 figures (EUR 15.3bn, 94 deals).
  • Industrials & Chemicals sector borrowers tapped the markets for EUR 22.5bn in debt across 38 deals in 2021, followed by Consumer companies (EUR 13.5bn across 33 deals) and Construction issuers (EUR 12.4bn across 14 deals).
  • Total leverage levels on buyout deals fell to an average debt to EBITDA ratio of 5.7x in 2021 from 5.8x in 2020, when 46% of LBO financings carried a leverage ratio greater than or equal to 6x, versus only 35% of deals levered to this point in 2021.
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