02/22/2021 | Press release | Distributed by Public on 02/22/2021 04:32
London, 22 February 2021 - The COVID-19 pandemic will accelerate UK and European corporates' plans to divest non-core businesses, increasing corporate carve-out activity across the continent in 2021, according to the findings of the AURELIUS Equity Opportunities European Corporate Carve-Out Survey.
The sixth annual survey conducted by AURELIUS reveals that despite 61% of respondents predicting that increased complexity in the valuing of assets will be the biggest barrier to transacting (up from 38% in 2020), 89% expect the volume of corporate carve-outs to increase in 2021 (versus only 60% in 2020).
These findings align strongly to continued uncertainty, macro-economic conditions and mounting corporate debt which are complicating due diligence and business valuations. This contrasts to previous years, consecutively revealing the highest bidder1 and ability to execute2 would drive corporate carve-out activity, before the unprecedented volatility created by COVID-19.
Every year the AURELIUS European Corporate Carve-Out Survey canvasses corporate and advisory professionals to reveal year-on-year trends in the market and predictions of what lies ahead. This year's survey was conducted between 12 January and 5 February 2021.
The COVID-19 pandemic will accelerate plans at UK and European corporates to divest of non-core businesses in 2021.
The vast majority of specialist advisors anticipate a frenetic year of corporate carve-out activity and non-core corporate divestment processes to be initiated by global groups.
The increased complexity of valuation will be the biggest barrier to transacting corporate carve-outs, making the buyer's ability to execute even more important.
Matthias Täubl, CEO of AURELIUS, said: 'The collective insight of our investment and advisory network confirms that we are reaching a tipping point in the level of corporate divestment activity. COVID-19 continues to create uncertainty, despite the commencement of the vaccine roll-out, which will likely lead to an increase in and acceleration of deals, as corporates seek to shore up balance sheets and simplify their operations. The landscape is primed for special situations investors and there are strong carve-out and turnaround opportunities across Europe.'
Tristan Nagler, UK Managing Director of AURELIUS, added: 'These findings have highlighted clear trends in corporate divestments, with the disruption of COVID-19 set to increase activity in 2021. The survey confirms much of what we have long been seeing at AURELIUS, as European and global corporates look to rationalise their portfolios after a year of government support. As an experienced special situations investor with a strong track record in complex carve-outs, we clearly see this moment as an opportunity.'
1 In 2019, 14% of respondents expected the highest bid would be the most important factor for corporate sellers when choosing a buyer for non-core businesses.
2 In 2020, 47% predicted a buyer's ability to execute the acquisition of a non-core asset would be the most important factor for corporate sellers when choosing a buyer.
3 Before the COVID-19 pandemic, last year only 60% predicted the volume of European corporates looking to sell non-core assets would increase in 2020 vs 2019.
4 Only 36% expected an increase in the number of corporates from outside Europe wanting to sell non-core European businesses in 2020 vs 2019.
5 In 2020, 42% predicted traditional financial sponsors would be the most active buyers of European non-core corporate assets, with only 34% naming turnaround and special situations investors.