The value of management buyout (MBO) deals in the Irish market fell significantly in the first half of the year, a new survey released yesterday showed.

According to the study carried out by the Centre for Management Buyout Research (CMBR) on behalf of Barclays Private Equity and Deloitte, the average value of the eight MBO deals conducted in the first half of this year was €34.6 million. This compares with an average value of €99.2 million for the 16 deals completed in the whole of 2006.

For the first half of this year, the total deal value was €277 million, compared with €1.5 billion for the whole of 2006. While eight deals in a six-month period is considered to be average, this compares with only seven deals completed in the whole of 2005.

"While buyout activity levels are consistent with prior years, deal values are lower in the first half," said David O'Flanagan, head of corporate finance at Deloitte. While the tightening of credit markets due to rising interest rates explains why the value is lower, Mr O'Flanagan said the trend was a coincidence.

He said he had seen no evidence that the tightening interest rate environment was deterring investors and said the outlook for the rest of the year remains positive.

"In a small country like the Republic it is very easy for the figures to be skewed by one or two large deals, such as the €317 million buyout of J&E Davy from Bank of Ireland last year," he said.

So far this year, only two buyouts have exceeded €25 million: the €175 million buyout of Mater Private Healthcare and the divestment of A-Wear from Brown Thomas for €70 million.

Mr O'Flanagan said he sees no reason why there won't be several larger deals in the second part of the year, but he admitted that banks may become more cautious in their lending.