Content
Principal conclusions
- The Argos Index® reached a new high of 10.3x EBITDA
- The percentage of transactions with multiples in excess of 20x is up sharply
- European mid-market M&A activity was down in 2019 despite a jump in the fourth quarter
New high of 10.3x EBITDA
Prices paid in the mid-market during the fourth quarter reflected the turnaround in economic projections at the end of the year:
- Principal central banks have inaugurated a new round of quantitative easing
- Fears of a worldwide recession have receded as economic growth continues in the United States and worldwide trade tensions appear to be subsiding
Median EV/EBITDA multiple on a six-month rolling basis
Source: Mid-market Argos Index® / Epsilon Research
The prices paid by strategic buyers remained high at 10.7x EBITDA
Source: Mid-market Argos Index® / Epsilon Research
The percentage of transactions at high multiples is increasing
Between 2018 and 2019, the percentage of transactions at multiples in excess of 20x EBITDA increased nearly four times.
Source: Mid-market Argos Index® / Epsilon Research
Still a significant listed / unlisted spread
The spread demonstrates the momentum of the unlisted market since 2018, buoyed by the microeconomic context:
- Investors drawn to unlisted assets
- Acquirers (funds and large corporate buyers) have easier access to credit
- Limited number of acquisition opportunities in the very-competitive mid-market
Source: Mid-market Argos Index® / Epsilon Research / InFront Analytics
European mid-market M&A activity down in 2019 despite a jump in the fourth quarter
Mid-market M&A activity in the eurozone increased by 30% in the fourth quarter, both in value and volume terms, driven by large, listed companies, which remain very active in this market.
Listed companies, which accounted for 65% of the strategic buyers in the second half of 2019, continue to be flush with record levels of cash; according to Moody’s (1), these levels have increased by 20% since 2013.
(1) Non-financial companies in the EMEA region had accumulated €1,085 billion in cash as of the end of 2018 (Source: Moody’s in Les Echos, Sept. 10, 2019)
Source: Epsilon Research / Market IQ