Despite the current turmoil in both the debt and equities markets, many financial intermediaries believe that the UK market for private equity buy-outs worth around £100 million or less will continue to thrive, according to a research commissioned by private equity firm August Equity.
The research also highlighted Healthcare, closely followed by Energy, Mining and Utilities, as the sectors most likely to do well amid the current economic environment.
The research was carried out by Mergermarket's research arm, Remark, who spoke to 70 intermediaries from 27 corporate finance houses.
65% of respondents said that the UK midmarket - referring to deals of £100 million or less - is the part of the market most likely to do well in the current environment.
Key areas identified as most likely to generate deal-flow opportunities included take-privates and distressed/restructuring deals.
Sectors perceived as "hot" in the current environment were largely the traditional safe-haven sectors. The Healthcare sector was selected by 17% of respondents. That was closely followed by companies connected with the Energy, Utilities and Mining sector, with surging oil and commodity prices expected to drive investments there, according to 16% of respondents.
The Business Services sector came in third, selected by 11% of respondents.
The number of UK midmarket buyout and expansion deals valued at £10 million to £100 million has remained stable throughout the previous 10 years, with an average of 158 deals completed per annum, according to data compiled by Private Equity Insight, part of Incisive Media.
Andrew Hartley, managing partner of August Equity, commented "The market expects the larger deals of over £100 million to slow down considerably, but it is evident through previous downturns the number of buy-outs between £10 million and £100 million has always held up well."