Alteris LLC tracks Mergers & Acquisitions (M&A) 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, generalized for many different types of companies of various sizes.
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 May 2021 show that M&A activity continues to increase after the earlier slow down. But the pandemic has created uncertainty and the underlying environment driving this trend is not entirely clear.
During the prior few months, average valuations were 6.8x (times) Adjusted EBITDA. This continues the trend where valuations are somewhat below that in the years before the health crisis.
A review of transactions shows that a substantial, but still a minority portion, of transactions are being valued at or above pandemic levels. There are issues that cloud the overall picture, however. First, there is an unusual valuation gap between better and not particularly well-performing businesses. Second, seller financing and earnouts are not as common as previously and finally, these transactions tend to be more in the nature of add-ons rather than being platform investments.
We will continue to monitor the trends and periodically to our readers during this unusual time.
Some definitions:
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization EBITDA is a surrogate for cash flow.
TEV is Total Equity Value.
