Alteris LLC tracks Mergers & Acquisitions (M&A) generalized valuation and other trends/metrics from its various partners and research sources. We will periodically report on what we find here. For more detailed information on valuations and M&A trends contact us directly.
Please note that this information is a summary of many different types of companies of various sizes in a variety of industries. The specific valuation for any individual company, for your business, may and probably will vary greatly. Each company and set of circumstances is unique and must be considered individually.
This data is collected from various sources and includes proprietary deal information from over 200 PEGs (Private Equity Groups) on $10-250mm sponsored transactions, with an average TEV near $50mm.
The information available as of February 2020 for the last quarter of 2019 show that valuations on private lower middle-market transactions ($10-250 million) slipped slightly to a 7.1x TEV/Adjusted EBITDA multiple.
There is a robust size premium for deals in the $10-25mm range averaging 5.6x. Similar transactions in the $100—250 million range averaged 9.7x for the year.
Total debt for the $10-250 million transactions slightly increased up to a 4x Adjusted EBITDA. The average equity contribution averaged 51%.
Larger businesses in desirable sectors are continuing to draw high multiples and stronger debt support. Smaller lower growth companies are being acquired by companies using more conservative capital structures.
We are continuing seeing multiples remaining elevated more than historically.
Some definitions:
TEV means Total Enterprise Value, which is calculated as TEV = Market Capitalization + Interest Bearing Debt + Preferred Stock – Excess Cash. TEV allows a comparison of companies with different levels of debt.
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization EBITDA is often used as a surrogate for cash flow.
