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Turmoil in the credit markets has undoubtedly had an adverse effect on larger deals as seen recently with fund Delta Two abandoning its bid for Sainsbury’s. This ill-fated £10.6 billion deal joined a long line of highly-leveraged bids that have failed to complete this year. The Qatari investment fund, with a 25 per cent stake in Sainsburys, pulled out because of, amongst other things, the spiralling financing costs.

This year alone has seen the value of failed buy-outs double to $202 billion (£96 billion) compared to last year. Bidders have scrapped 76 deals in 2007 compared to 55 in the same period last year, leaving us with doubts as to whether deals that have been announced publicly will actually close.

But despite the problems in the upper-tier, the mid-market remains buoyant with lenders continuing to do deals, such as NBGI’s acquisition of Superglass (see pg 24), which delivered a huge return for the private equity house. NBGI bought the insulation specialist for £5.5 million two years ago and saw its initial investment grow more than tenfold following its IPO in July.

Curiously, the Chancellor’s decision to cut taper relief, which will undoubtedly cause havoc in certain investment circles, could deliver an inadvertent (and admittedly short-term) shot in the arm for deal-makers. Not only may entrepreneurs who have contemplated an exit be tempted to sell before the April 2008 deadline – and be willing to pay advisers extra to make sure deals go through smoothly – but ventures that are cash rich and not burdened with debt may view the next six months or so as an ideal time to go shopping.

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