This month’s issue of the monthly executive brief providing M&A market insight for C-level management and their professional advisors.
As 2016 begins, a look back on the last year reveals only a slight variation on the status quo. According to GF Data, trends in transaction activity remained fairly constant, but the number of completed deals dropped over 27% from the second quarter to the third (51 deals to 37).
Size premiums remained at near record levels and valuation rewards for better than average performing companies continued. Companies in the $50–250 million total enterprise value range traded at an average of 8.0x for the first nine months of the year, while smaller size companies ($10–50 million) traded at an average of 6.3x (see figure 2).
As we kick off 2016, deals tend to reward companies with not only better than average financial performance, but also prior institutional ownership and management retention post sale. Buyouts featuring these elements have been valued at an average 8.9x in the past year.