The UK’s buyout market was as in rude health last year and the prognosis for 2005 is even better, according to research from KPMG’s private equity team.

The fourth quarter of 2004 saw rates of investment in UK management buyouts increase, with 37 transactions taking place in all, worth a combined £5.42 billion. The year as a whole produced 145 larger buyouts (over £10 million), which were worth a total of £19.35 billion. This represents an increase of 24 per cent in value and 17 per cent in number over 2003 levels.

According to Charles Milner, head of corporate finance at KPMG’s private equity division, this bodes well for the year ahead. ‘The last quarter of 2004 was strong across the whole of the UK buyout market [with] strong activity in the middle market' he explains adding that 'there are no signs this level of activity will let up in the New Year.’

Gazing into his private equity crystal ball, Milner predicts, ‘The outlook for 2005 is positive with evidence of high levels of investment activity backed up by improving market conditions and the ongoing availability of funding. A particular feature of the UK mid-market in 2005 will be a significant number of private equity houses raising money for new funds.’