The Argos Index® mid-market

Fourth quarter 2019

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
01

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
02

The prices paid by strategic buyers remained high at 10.7x EBITDA

Graph 2 – Enterprise value / historical EBITDA
Source: Mid-market Argos Index® / Epsilon Research
03

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.

Graph 3 – Percentage of transactions at multiples > 15x EBITDA
Source: Mid-market Argos Index® / Epsilon Research
04

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
Graph 4 – Comparison of listed (1) and unlisted mid-market multiples (paid by strategic buyers)
Source: Mid-market Argos Index® / Epsilon Research / InFront Analytics
05

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)

Graph 5 – Eurozone mid-market activity (€15-500 million) in volume, by segment
Source: Epsilon Research / Market IQ

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