Corporates outspend PE houses in mid-market, says Argos research

Greg Gille
20 May 2015

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The median entry multiple paid by private equity houses in mid-market deals has continued to fall for the second quarter in a row, while corporates still appear eager to spend, according to the latest Argos Soditic Mid-Market Index.

The median entry multiple paid by buyout houses for mid-market deals (here defined as transactions worth between €15-500m) settled at 7.5x EBITDA in the first quarter of 2015, against 8.4x in Q4 last year. The fourth quarter of 2014 figure was already down slightly on the 8.5x multiple recorded in Q3 last year. Overall, the median multiple paid by private equity has fallen by 12% since September last year, according to the index (published by GP Argos Soditic, in association with Epsilon Research).

Meanwhile, the corresponding entry multiple for corporate M&A transactions has continued to rise sharply, settling at 8.7x in Q1 2015, against 8x in the previous quarter and 7.5x in Q3 last year.

Corporate buyers are now back to outspending private equity houses for the first time since Q2 2014, according to the index. Despite the significant levels of dry powder still available to European GPs and the competition surrounding the most attractive assets, it seems buyout houses are unwilling to align themselves with strategic buyers – and particularly those from the US, bolstered by favourable currency trends.