Acquisition prices for European SMEs stabilised at 8.9x EBITDA
The mid-market Argos Index® for the second quarter of 2024, published by Argos Wityu, the independent European investment fund, and Epsilon Research, the online platform for the management of unlisted M&A transactions, is now available. Launched in 2006, this index tracks the valuations of unlisted eurozone SMEs in which a majority stake has been acquired during the last six months.
“In the second quarter of 2024, acquisition prices for unlisted eurozone SMEs stabilised at 8.9x EBITDA. The index was supported by the slow recovery in M&A activity in the mid-market, resulting from the stabilisation in macroeconomic conditions, together with a fall in inflation and expectations that the ECB would cut rates before the Fed. However, economic and political uncertainties are preventing a meaningful upturn in M&A activity. In addition, financing conditions are still the toughest in a decade and the cost of capital is high, and these factors remain a drag on valuations,” said Louis Godron, Managing Partner at Argos Wityu.
Acquisition prices for unlisted European SMEs were stable at 8.9x EBITDA
Median EV/EBITDA multiple on a six-month rolling basis – Source: mid-market Argos Index® / Epsilon Research
- In the second quarter of 2024, the Argos Index® stabilised at 8.9x EBITDA, slightly above its 20-year average.
- Prices have stopped converging between the upper and lower segments of the mid-market. The mid-market appears increasingly polarised.
Index supported by a small increase in multiples paid by investment funds
- Multiples paid by investment funds were up 2% to 9.3x EBITDA.
- Multiples paid by strategic buyers were stable at 8.7x EBITDA, unchanged since the fourth quarter of 2023, while those in public equity markets were back to their December 2023 level[1].
Record proportion of transactions at extreme multiples
- 48% of transactions took place at extreme multiples, i.e. less than 7x or more than 15x EBITDA, which is the highest proportion since 2018.
- Transactions at multiples of less than 7x EBITDA accounted for 31% of the transactions analysed.
- The proportion of transactions at multiples of more than 15x EBITDA rose to 17%. Funds accounted for 60% of these transactions. There were a limited number of deals with multiples of more than 20x.
Gradual upturn in mid-market M&A volumes in the eurozone, in line with the global rebound
- Mid-market M&A activity in the eurozone was supported by the gradual recovery in LBOs, which were up 16% in volume terms and 28% in value terms in the first half of 2024 compared to the second half of 2023.
- The proportion of LBOs increased to 17% of the M&A market (in terms of the number of deals), up from 15% in 2023 as a whole.
[1] The Euro STOXX® TMI Small index was down 3.6% in the second quarter of 2024.
Argos Wityu
Coralie Cornet
ccc@argos.fund
+33 6 14 38 33 37
Argos Wityu is an independent European private-equity group supporting the growth of SMEs and mid-caps and their management teams. It has more than €1.8 billion in assets under management, over 30 years of experience, has supported more than 90 companies and operates from offices in Amsterdam, Brussels, Frankfurt, Geneva, Luxembourg, Milan and Paris. The group seeks to acquire majority interests and invests between €10 million and €100 million per investment via its two strategies:
- The Mid-Market fund helps companies arrange changes of ownership in order to accelerate growth.
- The Climate Action fund (SFDR 9) aims to shape sustainable European leaders by facilitating their grey-to-green transition.
Epsilon Research has developed the leading professional online platform for the management of unlisted M&A transactions. The platform includes data, analysis reports, software tools and services that are essential for evaluating and managing unlisted investments: the EMAT database of European transaction multiples, with detailed analysis of over 10,000 M&A deals covering all industry sectors; indices and studies published regularly by Epsilon, including the Argos Index®; a tool for evaluating the portfolios of private equity funds; cloud-based M&A CRM and project management software; and an online dataroom for SME transactions.
The mid-market Argos Index® tracks valuations of unlisted mid-market companies in the eurozone. Compiled by Argos Wityu and Epsilon Research and published every three months, it shows the median EV/EBITDA multiple, on a six-month rolling basis, of transactions meeting the following criteria: mid-market deal (equity value between €15 million and €500 million for 100%), target based in a eurozone country, acquisition of a majority stake, certain activities excluded (financial services, real estate, high-tech).
