Latest release - H2 2009
Decline in unlisted mid-market valuations slows : suggesting improvement ?
Paris, 19 March 2010
The Argos Mid-Market Index, measuring the level of unlisted mid-market company valuations in the euro zone, is once again down in December 2009, reaching 6.0x EBITDA, its lowest point since the creation of the Index in December 2004. However, the decline is less severe than for the previous period: -4% compared with -17%. Is this a sign of improvement or merely a temporary halt in the decline ?
The deterioration of the companies’ performances and of their growth outlooks impacts the level of valuations for transactions carried out by both trade buyers and LBO funds. In addition, buyout funds suffer from difficult access to financing therefore having to increase their equity contributions to an historic high (on average 56% of transaction value), further bringing down valuations.
The fall in the prices paid by strategic buyers is mostly due to the limited activity of listed companies and foreign buyers, especially American companies (6% of all transactions) who have traditionally been ready to pay higher prices for their acquisitions.
Therefore, valuations decline for acquisitions made by strategic buyers (6.2x EBITDA compared to 6.6x in June) as well as for those made by LBO funds (5.7x EBITDA compared to 6.1x in June).
Finally, “the crisis that marked 2009 had a significant impact on the kind of transactions carried out during the year, as many transactions involved target companies being restructured”, and are thus not included in the Index sample (negative EBITDA), explains Gilles Mougenot, President of Argos Soditic. “The Index thus represents only a part of the market.”
Download the complete Index : H2 2009 (PDF)
Previous releases (PDF)
About the Argos Mid-Market Index
The Argos Mid-Market Index measures the evolution of European private mid-market company prices. Carried out by Epsilon Research for Argos Soditic and published every six months, it is based the following criteria:
- median EV/EBITDA multiples on a twelve-month rolling basis (year N-1)
- mid-market companies (Equity value between €15m and €150m)
- target based in a Euro zone country
- acquisition of a majority stake
- certain activities excluded (financial services, real estate, high-tech)
