Buy-outs and deals in decline.

THE total value of private equity-backed buy-outs in the North East fell by 60% in the first nine months of 2009 to pounds 65.9m compared with the same period last year (pounds 166.5m), according to the Centre for Management Buy-out Research (CMBOR).

As expected, the number of deals in the region also declined, with just 12 buy-outs completed in the first nine months of 2009, compared with 24 for 2008.

In addition, the average deal value for the first three quarters of 2009 was just pounds 5.5m, down 13% on the 2008 figure (pounds 6.3m) and 41 per cent on 2007 (pounds 9.4m).

The North East has seen a marked decline in both lower mid-market (pounds 10m-100m) and small deals (less than pounds 10m) in the first nine months of 2009.

There has been just one lower mid-market deal in 2009 (pounds 50m) so far, compared to five in 2008 (pounds 148m) and three in 2007 (pounds 158m). There has not been a mid-market deal (over pounds 100m) since 2006.

Manufacturing businesses proved to be the most popular targets for deals in the region, with five buy-outs totalling pounds 8m. However, it was a single pounds 50m lower mid-market deal in the Healthcare sector that made up 52% of total deal values.

Family and privately-owned businesses represented the biggest source of buy-outs in frequency in the first nine months of 2009 with five deals totalling pounds 9m, while there were also five companies' bought out of receivership in deals amounting to pounds 6m.

John Walker, director at Barclays Private Equity in the North, said: "With values for the first nine months down considerably, the market in the North East is failing to show any indication of a sustainable recovery as conditions remain testing."