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Market Data Trends & Highlights – Fall 2016


The slowdown in M&A activity has been neither as deep nor as prolonged as general industry reports would suggest. After a quiet 1Q16, completed deal volume and TEV/EBITDA multiples increased in 2Q16, from 46 to 58 and 6.6x to 6.8x respectively.

Quarter-to-quarter shifts in valuation over the past two and a half years have not been material. In addition, the “size” premium— the spread between valuations on $10-50M and $50-250M TEV transactions—has been remarkably steady. The spread of 2.2x (an average of 5.8x on the smaller deals and 8.1x on the larger ones) in the first six months of 2016 is exactly in line with the spread in 2014-15. While the market has been relatively stable in equity values, there has been more movement over time in debt levels. Total debt to EBITDA averaged in the “mid-threes” for several years before rising to 3.9x.

Download Market Report Here: Market Report Fall 2016.

Market Data Trends & Highlights – April 2016

April_ImageCompleted transaction activity picked up in the fourth quarter, after a notably fallow 3Q. Data from over 200 private equity groups and other deal sponsors reported 62 completed 4Q transactions of $10-250 million TEV and TEV/Adjusted EBITDA multiples of 3-15x. This is markedly ahead of 39 closed deals in 3Q, and nearly on par with 65 in the fourth quarter of 2014. While deal volume increased in the fourth quarter, the average valuation dipped to 6.5x.

Annual data has a way of smoothing out blips in the interim periods. In the end, 2015 looked a lot like 2014. Completed deal volume: 218 in 2015 compared to 211 in ’14. Overall valuation multiples: 6.7x in both years. However, a closer look at the data reveals a number of shifts that may or may not be signs of age in this “seller’s market.”

Download Market Report Here: Market Report Spring 2016.

Market Multiples and Trends – December 2015

November 2015 CoverThrough the first six months of 2015, middle market data from over 200 financial sponsors outlines current valuations in what can be described as a ripe “seller’s market.” Compared to a year ago, transaction volume in the first 6-months of the year is up modestly. However, this total fell short of predictions cast by a number of analysts on Wall Street; market conditions seemed to suggest that a record number of business owners would pursue a sale due to market multiples and seller leverage. The third quarter of 2015 represented more of the same for private middle market M&A – or less of the same, depending on what you are looking at. Valuations for the third quarter of 2015 averaged 7.1x, the highest quarterly mark in 13 years.

Buyers continue to pay a premium for larger businesses, which is consistent with historical data. In addition to this ‘size premium’, buyers identified additional key value drivers that they look for when evaluating a potential acquisition. These include: (1) institutional ownership prior to sale, as opposed to individual/family owned enterprises, (2) above-average financial characteristics, and (3) management remaining post-close. Each of these factors individually influenced overall valuation of the company. So, what does that mean? According to private deal data collected by GF Data Resources LLC, on average, a company that meets each of these 3 criteria was valued at 8.4x Adj. EBITDA.

Download full PDF Report Here: Market Report 2015