The quarter ending 31 March has seen 254 sponsor buyouts in Europe, the lowest volume figure since 2015. Of the 53 deals in March - a month otherwise characterised by news of sale processes being postponed or pulled – 28 came from Technology and Business Services, Mergermarket data shows.

Resilience in Technology and Business Service sectors 

With 14 sponsor buyouts in March, the Technology sector is the one showing more resilience in these first weeks of the pandemic. 

The green shoots below offer a sneak peek on the types of tech businesses investors seem to be more comfortable with at the moment:

• UK mid-market sponsor LDC made a GBP 11m investment in James and James, a provider of online order fulfillment to e-retailers;
• Netherlands-based Exxellence Groep, which provides software solutions for  governments to optimise their services, was taken over by Main Capital;
• One Equity Partners acquired Germany’s MCL, a provider of IT services to the workspace, security and cloud services.

Another 14 sponsor buyouts were in the Business Services segment. A sign that investors could be more confident in deploying money on asset-light companies and business models that help people to adopt (willingly or unwillingly) the new lifestyle brought by the pandemic.

• Agilitas’ acquisition of Learning Curve Group, a UK training specialist focused on helping learners improve their employability,
• Norvestor’s buyout of PHM Holding, a property maintenance service provider in Finland.
• BO France acquired Dominique Dutscher, a France-based distributor of  R&D laboratory consumables and equipment;
• Palero Capital bought Germany’s Sanimed, which offers mobility solutions to patients at home and in nursing  homes;
• LDC invested in Ashtons Hospital Pharmacy Services, a UK specialist in medicine management solutions to hospitals

A new world for the investors 

The areas of investment will change even faster as one sponsor adviser pointed out: “Investors will take a different approach going forward and the favourite targets of yesterday are not likely to be the same of tomorrow.” Investors will also put the company’s business model under scrutiny. Outsourcing could weight more as a risk factor while social distancing measures may last longer than initially expected.

João Grando Private Equity Editor, EMEA Mergermarket

Joao Grando is Mergermarket’s Private Equity Editor, EMEA. He has been a journalist covering industrials and private equity-related M&A across Europe with Mergermarket since 2015.