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. Every company is unique and the valuation metrics will be different for each.
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 September 2019 show that valuations on private middle-market transactions in the USA for the first half of 2019 ranged from 6.4 EBITDA of 2019 for companies with a TEV of $10-25 million. It was at 7.1x EBITDA for businesses with a TEV of $25-50 million and 7.2x EBITDA for those with a TEV of $50-100 million. Previously it was on average 7.1x EBITDA in 2018.
Note that transactions over $50 million had higher multiples than on smaller deals.
The use of debt utilization continues to be high. The average equity has decreased from 50% in the second half of 2018 to 46% in the first half of 2019.
Utilization of Rep and Warranty insurance was 53% in the year to date, up from 52% in 2018. Incidence by deal size also tended to remain the same. In the 25% range at $10-25 million TEV, 50-60% at $25-50 million and 75-80% at $50-250 million.
The average cap on indemnification against breaches of reps and warranties was 9.8% in the first half of 2019. This is what we were seeing prior to the apparently temporary increase in 2018.
Some definitions:
TEV refers to Total Equity Value.
EBITDA refers to Earnings Before Interest, Taxes, Depreciation and Amortization. EBITDA is sometimes used as a surrogate for cash flow.
