The Q3 2022 Argos Index® was stable at 10.0x EBITDA, in line with the average of the past five years.

This apparent stability conceals the divergence between the high end of the market, where multiples are still above 12x EBITDA, and the lower end were multiples decreased by 0.8 EBITDA point to 8.9x EBITDA. Large, quality assets with stronger pricing power are seen as more resilient during periods of crisis.

This stability contrasts with the geopolitical and financial deteriorating context and stock market turmoil (1). The alignment that created an historically good M&A environment (low interests, abundance of capital, and economic growth) has shifted in 2022 and continues to worsen in Q3. With global inflationary pressures building, interest rates rising at historic speed, and economic activity on the brink of a recession, the long upward M&A cycle seems has reversed (2).

However, the impact of these adverse conditions on the Eurozone M&A mid-market prices and activity (down 11% in Q3 but stable in value) looks moderate at this point. The mid-market remains highly competitive and continues to benefit from large capital flows to unlisted companies (3). Both strategic buyers and private equity firms are looking to take advantage of market volatility, that many see as cyclical rather than structural, to find attractive growth opportunities.

It should be noted that the Index’s component sectors were stable this quarter and did not impact the Argos Index®, as was the case in the Covid crisis.