Stability of the Index t 8.5x EBITDA
The Argos Mid-Market Index has remained stable in the 2nd quarter of 2016 at 8.5x EBITDA, after the fall seen in the first quarter. This stability hides diverging trends: on one hand between the transactions in the €15m to €150m price segment and the €150m to €500m price segment; and on the other hand between the private equity and strategic buyers.
Particularly, prices paid by trade buyers have fallen by 10% to 8.2x EBITDA, pulled down by the decrease in multiples paid by trade buyers in the €15m to €150m segment. This segment represents 75% of transactions realised by trade buyers in the M&A Mid-Market:
This overall fall of 10% can be explained by:
– The strong stock market correction in the first half of the year; especially as the proportion of quoted groups among the trade buyers remains high (67%).
– The fall in acquisitions by foreign buyers, which represented 48% of the trade buyers in the first half 2016 (vs 59% in the 2nd half of 2015) as a result of political uncertainty in Europe – and primarily risks arising from Brexit. On this point, the proportion of European buyers not located in the Eurozone (including the British) fell from 33% in the 1st half of 2014 to 25% in the 1st half of 2016.
Conversely, Multiples paid by private equity funds have increased by 5% in the 2nd quarter to 8.6x EBITDA.
These developments take place against a backdrop of an increase in Mid-Market M&A activity in the 2nd quarter (+9% in volume, +34% in value).
« The M&A mid-market within the Eurozone has been particularly active in the 2nd quarter compared to the global M&A market, despite some macroeconomics uncertainties » remarks Gilles Mougenot, President of Argos Wityu Partners.
About Argos Wityu
Argos Wityu is an independent European private equity group with offices in Paris, Milan, Brussels and Geneva. Since its creation in 1989, Argos Wityu has carried out more than 60 transactions focusing on management buy-outs and buy-ins in small and medium companies. Argos Wityu typically takes majority stakes ranging from €10m to €60m in companies with revenues of €20m to €400m.
With €675m under management, the firm has developed a track record of unusual, complex and off market transactions where the firm’s combination of local presence and international experience is able to add value to the small and medium-sized businesses it invests in.
About Epsilon Research
Epsilon Research developed the first online platform for the management of non-quoted M&A transactions, aimed at professionals: M&A advisers, private equity funds, valuators, corporates. The Epsilon Platform includes data, analysis reports, software tools and services essential to private company valuation / deal management:
(1) EMAT, the largest database of European private company transaction multiples, with detailed analysis of 6,000+ M&A deals, ranging from €1m to €500m in value, covering all industry sectors; (2) Indices and studies published regularly by Epsilon, such as the Argos Index; (3) Cloud-based software for M&A contacts and project management (“M&A CRM Suite”); and for valuation projects (comparables, private equity fund portfolios).
About the Argos Mid-Market Index
The Argos Mid-Market Index measures the evolution of European private Mid-Market valuations. Based on the median of historical EV/EBITDA multiples, on a six-month rolling basis, it is carried out by Argos Wityu and Epsilon Research, and published every three months. The transaction sample fulfils the following criteria:
- Mid-Market companies (equity value between €15m and €500m),
- Target based in a euro zone country,
- Acquisition of a majority stake,
- Specific industries excluded (financial services, real estate, high-tech).
Next Argos Mid-Market Index: Tuesday 22nd November 2016
Argos Wityu Contacts : Gilles MOUGENOT, Raphaël BAZIN
Press : Virginie SUARD, email@example.com, Tél. +33 1 53 67 20 50
Epsilon Research Contact : Grégoire BUISSON, firstname.lastname@example.org, Tél. +33 1 47 70 30 24