P2P

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Adherence to secrecy, pre-announcement preparations, realistic expectations-setting, and strategic plans for taking control are keys to P2P deal success.

By Richard Butterwick, Pierre-Louis Clero, Manuel Deo, Tom D. Evans, Tobias Larisch, David J. Walker, Suneel Basson-Bhatoa, Phillippe Tesson, Connor Cahalane, and Catherine Campbell

The deal market has seen a resurgence in public to private (P2P) transactions — global P2P volumes exceeded €115 billion in 2018, and have already surpassed €88 billion as of September 2019. As PE firms increasingly target complex and ambitious European P2P deals, deal teams need to consider tactics and understand local requirements. In our view, buyout firms can maximise the likelihood of successfully closing a P2P deal by considering these key issues.

Manage Your Information Expectations — Public Diligence Is Different

Public deals can falter over diligence, particularly if information requests are sizeable or require significant management time. Additional diligence will likely be carried out post agreement of headline terms — e.g., review of key legal documents, management presentations, etc. — but this is typically more limited than on a private deal, particularly with respect to time. In the UK, France, and Spain, equal information must be provided to bidders — target boards will be conscious that information shared with a bidder may need to be more widely distributed in due course. In Germany, while bidders do not need to be treated equally, access to information will only be granted by the target if it considers this to be in the best interests of the shareholders and the company. In all cases, buyers need to act quickly, with clear and realistic expectations of the public diligence process, in order to keep the board onside.

By Ben Coleman and Catherine Campbell

Public to private deals (P2Ps) have remained a strong feature of the UK private equity deal market in 2018, with five take-private bids reaching an enterprise value of more than £1 billion already this year. Large P2Ps have already surpassed 2017 totals, which saw just one PE bid for a public company above the £1 billion mark. The increase in P2P deal values has also been coupled with greater P2P activity generally over the past couple of years. There were 18 P2Ps in 2016 and 14 in 2017, compared to just four P2Ps in 2013 and nine in 2014. Club deals have also become more common, demonstrated by Blackstone and CVC’s acquisition of payments company Paysafe last year.

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Will the trend continue?

We believe that the steady flow of P2P transactions is likely to continue, driven in part by a scarcity of high-quality private assets for sale in the UK market. PE deal teams are seeking opportunities in public markets and are increasingly scouring these markets for value. Companies under siege from short sellers, or undervalued by shareholders, can result in under valuations, offering PE firms opportunities and offsetting the significant bid premium required on a public takeover deal.