Argos Mid-Market Index June 2010 – Buyout transactions contribute to increasing mid-market valuations
Paris – Following 3 consecutive years of decline, the valuations of private mid-market companies in the Euro Zone rose to 6.4x EBITDA, an increase of 7% compared to their previous level.
After a period focused on maintaining or recovering their margins, strategic buyers are again engaging in acquisitions, and consequently driving the increase in the Argos Mid-Market Index with multiples that have remained above those of LBO transactions : 6.5x EBITDA compared to 5.8x EBITDA.
However, buyout funds contributed significantly to raising valuations, as a high portion of their deals was carried out at high multiples (on average 11.0x EBITDA for the 1st quartile). Taking advantage of the record level vehicles raised in 2006-2007 which have not been sufficiently invested, LBO funds showed particularly strong interest in companies whose performance has resisted the crisis environment.
“A number of LBO funds are eager to accelerate their pace of investment before returning to their investors to raise new funds”, commented Gilles Mougenot, President of Argos Wityu France. Although some sellers do not wish to delay any longer the sale of their companies and acquisition opportunities have thus became more numerous, actual M&A activity has not significantly resumed and remains well below its pre-crisis level.
About Argos Wityu
Created in 1989, Argos Wityu is an independent European Private Equity firm with offices in Milan, Paris and Geneva, wholly owned and operated by its partners. Argos Wityu focuses on management buy-outs and buy-ins in small and medium sized companies across Europe, but primarily in France, Italy and Switzerland. The group of funds managed by the firm typically takes majority stakes ranging from €10m to €50m in companies with revenues of €20m to €400m. Operations carried out by Argos Wityu include Buffet Crampon, Roc-Eclerc, Oxbow, Du Pareil au Même and Kermel in France, Sparco, GPP in Italy, and Maillefer, Kägi and ORS in Switzerland. The €275m ARGOS WITYU V fund raised in 2006 has allowed the firm to carry out 15 transactions to date.
About Epsilon Research (www.epsilon-research.com)
Epsilon Research is the first financial analysis bureau to specialise in European private company M&A/private equity transactions. Its key product, EMAT (« Epsilon Multiple Analysis Tool™ »), is a unique database of European deal analysis reports that includes the detailed calculation of acquisition multiples, accessible via its proprietary IT platform. For its customers (investment funds, banks, corporations, advisors, accountants) it has quickly become a source of reference in Europe for private company acquisition multiples. Epsilon has also developed a number of market intelligence tools: financial databases (M&A transactions, company accounts); sector indices; market studies and analysis; tailored service for private equity quarterly portfolio valuations.
Epsilon’s team is composed of Paris and London based corporate finance professionals and financial analysts. For its EMAT database, Epsilon has received the label of Finance Innovation, the Paris-based global financial services cluster.
About the Argos Mid-Market Index
The Argos Mid-Market Index measures the evolution of European private mid-market company prices. Based on the median of historical EV/EBITDA multiples, on a twelve-month rolling basis, it is carried out by Argos Wityu and Epsilon Research, and published every six months. The transaction sample fulfils the following criteria:
- mid-market companies (equity value between €15M and €150M)
- target based in a Euro Zone country
- acquisition of a majority stake
- specific industries excluded (financial services, real estate, high-tech)