After more than 2.5 consecutive years of growth, valuations of euro zone private mid market companies dropped by 6.5% in March 2012.
Less spectacular than that recorded in June 2009, the decrease nevertheless concerns all categories of buyers, both strategic and financial.
The difficulties in securing acquisition financing are not the main explanation, even though financing remains complex. It is, above all, the deterioration of overall growth perspectives and the financial difficulties affecting the euro zone, that “limit visibility on earnings and thus make the buyers more cautious”, explains Gilles Mougenot, Chairman of Argos Soditic France.
The fall in the valuations is accompanied also by a sharp drop in M&A activity which declined by 23% in volume and 48% in value compared to the previous quarter while mid market LBO activity slumped by 61% in volume and 85% in value. M&A activity thus fell to its lowest level since the creation of the Index
About Argos Soditic
Argos Soditic is an independent European private equity group with offices in Paris, Milan and Geneva.
Since its creation in 1989, Argos Soditic has carried out more than 50 transactions focusing on management buy-outs and buy-ins in small and medium companies.
Argos Soditic typically takes majority stakes ranging from €5m to €50m in companies with revenues of €20m to €400m.
With €700m under management, the firm has developed a track record of unusual, complex and off-market transactions where the firm’s combination of local presence and international experience is able to add value to the small and medium sized businesses it invests in.
About Epsilon Research
Epsilon Research is an independent research and financial analysis bureau specialising in the M&A/private equity markets. It has developed the largest database for European private company transaction multiples (EMAT), and provides research reports, market intelligence and indices on a regular basis.
The EMAT database (« Epsilon Multiple Analysis Tool™ ») includes the detailed analysis of 5,000+ M&A deals (1 to €500m value) covering all industry sectors. Accessible via a proprietary web platform, it has quickly become for its customers (funds, banks, accountants, M&A advisors, corporates) a reference source in Europe for private company acquisition multiples.
Epsilon's team is composed of corporate finance professionals and financial analysts, Paris and London based. It has received for its EMAT database the label of Finance Innovation, the Paris-based global financial services cluster.
About the Argos Mid-Market Index
The Argos Mid-Market Index measures the evolution of European private mid-market valuations. Based on the median of historical EV/EBITDA multiples, on a six-month rolling basis, it is carried out by Argos Soditic and Epsilon Research, and published every three months. The transaction sample fulfils the following criteria:
• mid-market companies (equity value between €15m and €150m)
• target based in a euro zone country
• acquisition of a majority stake
• specific industries excluded (financial services, real estate, high-tech)
Argos Mid-Market Index next release: July 2012
Contacts Argos Soditic: Gilles MOUGENOT, Karel KROUPA
Download the Argos Mid-Market Index: www.argos-soditic.com/en/press-room/argos-mid-market-index.html
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