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.
Please know that the valuation information here is for the first quarter of 2020, that is the months of January – March. This information will almost certainly be affected by the coronavirus pandemic, as stay-at-home orders in various states started to occur in March.
The information available as of May 2020 for the first quarter of 2020 show that valuations on private lower middle-market transactions ($10-25 million) averaged 5.7x and those transactions in the range of $100-250 million averaged a multiple of 9.6x. This is a TEV/Adjusted EBITDA multiple.
There is a robust size premium for deals in the $100-250mm range. These multiples were very similar to those of Q4 2019.
Senior debt increased slightly upwards averaging 3.5x in Q1 2020. Interest rates declined over the period of the quarter, reflecting the Feds response to the pandemic.
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.
