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Clearwater Multiples Heatmap: Valuations ease as PE deals slow down

Clearwater Multiples Heatmap: Valuations ease as PE deals slow down
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Against an increasingly complex background, European PE activity slowed markedly in 3Q22 bringing down the average long-term EV/EBITDA multiples of sponsor-backed transactions, the latest Clearwater Multiples Heatmap shows.

Dealmaking conditions continued to tighten, with rising inflation, higher interest rates and mounting supply-side constraints playing on acquirers' minds. Transaction volume in Q3 was down 25% quarter-on-quarter, while the deal value saw an even sharper fall, down 46% to EUR 44.9bn.

That said, 2Q22 was always going to be a hard act to follow – the value achieved in that remarkable three-month period (EUR 83.6bn) was the highest ever recorded. LTM deal value data paints a more stable picture: at EUR 267.5bn, year-to-date transactions in 3Q22 are down by only 8% on a year-on-year comparison.

In this context, France was Europe's most prolific PE deal generator in volume terms in 3Q22, logging 57 transactions, comfortably ahead of second-place UK and Ireland with 49. The country also seized the top spot in value, with transactions totalling EUR 15.1bn in Q3, up 60% compared to the previous quarter.

Focusing on key sectors in Europe, Q3's star performers in terms of volume were TMT and industrials & chemicals, each of which logged 51 deals. However, in both cases, volumes were down compared to the previous quarter. Business services was the next busiest sector, achieving a tally of 42 deals, followed by consumer with 24 transactions.

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

  • Detailed breakdowns of deal activity trends for Q3 2022;
  • Quarterly transaction value and volume movements across the past six quarters;
  • Qualitative deep-dives on the TMT sector and the outlook for US sponsors.
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