Multiples Heatmap: TMT deals inked in Q3 pass 19x mark

Unquote and Clearwater International
25 November 2021

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Average entry multiples were again pushed into record territory in Q3 on the back of a still-buoyant M&A market, according to the latest Clearwater Multiples Heatmap.

Deal-makers shrugged off concerns about inflation, supply chain constraints and rising Covid-19 cases to propel European PE activity to near-record highs in Q3 2021. Indeed, 2021 is now set to break all previous records for both volume and value. Total deal value in the first three quarters of 2021 was €203bn – already comfortably exceeding that of any previous full year, while deal volume is on track to hit a new all-time high.

In Q3, the average EV/EBITDA multiple over the last 12 months (LTM) for European PE-backed transactions climbed to 11.8x. This is a new record and it follows an unbroken run of five quarterly increases.

This helped to push LTM multiples into record territory in Q3. TMT was red hot, with the 12-month multiple jumping to 14.3x – up from 12.7x in Q2. This was the sharpest rise in any sector. Healthcare and business services also broke new ground, achieving multiples of 14.3x and 12.6x respectively. Against this background, the average multiple paid in PE-backed deals jumped to 12.4x versus 11.8x in Q2.

Looking purely at multiples for deals inked in Q3, TMT again broke new ground with an average multiple of 19.1x in Q3 versus 11.6x in Q2. And in terms of deal size, transactions in the sub-€50m segment saw the sharpest rise with the quarterly multiple rocketing to 17.5x in Q3 from 12.2x in Q2.

Click here to download the Q3 Multiples Heatmap report, including:

Detailed breakdowns of pricing and activity trends for Q3 2021
Quarterly pricing movements across the past six quarters
Qualitative deep-dives on the TMT sector and the influx of US PE buyers in the European market