Acquisition prices for SMEs decline in Q1 2020 – research

Katharine Hidalgo
13 May 2020

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Valuations for unlisted mid-market companies in the eurozone tracked by the Argos Mid-market Index declined in Q1 2020.

Prices paid to acquire SMEs dropped significantly to 9.3x EBITDA, after reaching a record high of 10.3x EBITDA in the previous quarter, according to the report.

This decline is said to reflect the market's anticipation of a downturn in the economy at the beginning of the year, as the index was calculated while the impact of the Covid-19 crisis was still limited.

Multiples paid by corporate buyers declines to 10x EBITDA, while prices paid by investment funds averaged 8.8x EBITDA and were down 12% over the quarter.

Transactions in excess of 15x EBITDA were down, representing 12% of the transactions carried out during the quarter.

Carried out by Argos Wityu and Epsilon Research, the Argos Mid-Market Index reflects median EV/EBITDA multiples, on a six-month rolling basis, of transactions with an equity value of €15-500m for the acquisition of a majority stake.