European acquisition finance market review: back to basics

We recently reviewed the European acquisition finance market to assess how the market is currently developing, following a period of severe downturn in 2008 to 2009 when credit markets froze and liquidity from CLOs dried up.

The respondents were primarily acquisition finance bankers in Western Europe. The review provides a detailed picture of their evaluation of the acquisition finance market and the prospects for recovery. The majority of respondents (65 per cent) are lending and underwriting in comparison to 22 per cent lending only.

The key findings are:

• The European acquisition finance market is open for business again but the shock of the crisis lives on in banks’ renewed focus on risk and tighter criteria for transactions.
• Confidence is returning but on a more balanced and realistic basis.
• Respondents remain cautious on pricing and leverage levels.
• With a “wall of debt” due for refinancing over the coming years, respondents see little prospect of a return to the conditions of 2007 and many believe that the peak will never be repeated.
• In the short to medium term, the market’s prospects remain tied to events in the wider economy and restoration of confidence in the banking system.

View the full report European acquisition finance back to basics (pdf 389 KB)