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Quarterly Edition, Q2 2019_____________________
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Argos Index® mid-market
Evolution of Euro Zone Mid-Market Private Company Prices - Quarterly Index carried out by Epsilon Research
Acquisition prices of unlisted European SMEs remain stable at a historic high
Argos Wityu, the European independent private equity group, and Epsilon Research, the online platform for the management of unlisted M&A transactions, today published the mid-market Argos Index® for the 2nd quarter of 2019. This index, launched in 2006, measures changes in the valuations of Eurozone private mid-market companies in which a majority stake has been acquired during the last six months.
In the 2nd quarter of 2019 the mid-market Argos Index® remained stable at a historic high of 10.0x EBITDA. However, this stability conceals three differences:
- Multiples paid by strategic buyers fell slightly to 10.3x EBITDA, while multiples paid by private equity funds remained relatively stable (9.5x EBITDA in the 2nd quarter).
- These multiples contrast with those for listed mid-market companies, despite their 2nd-quarter increase to 8.8x EBITDA (1), in line with the growth of listed market indexes (2).
- Valuation multiples for transactions between €150m and €500m continued to rise during the quarter, while transactions between €15m and €150m declined.
In the first half of 2019, mid-market M&A activity showed a moderate 20% decline in value in the Eurozone, while the same segment fell 48% in the United Kingdom, due to the lack of visibility as to the terms of Brexit, scheduled for the end of the year, and total M&A activity, all segments combined, dropped 57% in Europe.
(1) Source: InFront Analytics
(2) The EURO STOXX® TMI Small Index rose by 1.7% in Q2 2019
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Argos Mid Market Index - Sample Analysis
| H2 2015 | H1 2016 | H2 2016 | H1 2017 | H2 2017 | H1 2018 | H2 2018 | H1 2019 | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sample Size | |||||||||||||||||||||||||||||||
| # deals retained for the index | 100 | 92 | 104 | 85 | 89 | 92 | 105 | 100 | |||||||||||||||||||||||
| Average Equity Value (€m) | 109.2 | 134.6 | 128.5 | 149.7 | 140.5 | 142.0 | 115.7 | 112.6 | |||||||||||||||||||||||
| Average N-1 sales (€m) | 120.8 | 158.4 | 133.3 | 131.2 | 113.3 | 130.0 | 112.0 | 124.4 | |||||||||||||||||||||||
| N-1 EBITDA margin | 15% | 14% | 12% | 15% | 14% | 13% | 15% | 13% | |||||||||||||||||||||||
| N-1 EBIT margin | 10% | 9% | 9% | 8% | 12% | 8% | 8% | 9% | |||||||||||||||||||||||
| Breakdown by size (equity value) | |||||||||||||||||||||||||||||||
| [15-49] €m | 42% | 25% | 37% | 27% | 25% | 28% | 36% | 31% | |||||||||||||||||||||||
| [50-99] €m | 29% | 29% | 15% | 18% | 18% | 21% | 20% | 24% | |||||||||||||||||||||||
| [100-150] €m | 6% | 17% | 12% | 13% | 22% | 16% | 18% | 19% | |||||||||||||||||||||||
| Breakdown by deal type | |||||||||||||||||||||||||||||||
| Acquisition | 78% | 65% | 69% | 65% | 67% | 74% | 71% | 65% | |||||||||||||||||||||||
| LBO | 22% | 35% | 31% | 35% | 33% | 26% | 29% | 35% | |||||||||||||||||||||||
| Breakdown by country | |||||||||||||||||||||||||||||||
| France | 25% | 34% | 28% | 35% | 28% | 32% | 34% | 49% | |||||||||||||||||||||||
| Germany | 15% | 16% | 20% | 14% | 13% | 15% | 20% | 14% | |||||||||||||||||||||||
| Italy | 24% | 26% | 13% | 15% | 19% | 14% | 15% | 13% | |||||||||||||||||||||||
| Benelux | 17% | 4% | 13% | 12% | 11% | 13% | 15% | 10% | |||||||||||||||||||||||
| Spain | 9% | 7% | 13% | 11% | 14% | 4% | 6% | 3% | |||||||||||||||||||||||
| Other (euro zone) | 10% | 13% | 13% | 13% | 15% | 22% | 10% | 11% | |||||||||||||||||||||||
| Breakdown by sector | |||||||||||||||||||||||||||||||
| Energy and Raw Materials | 4% | 13% | 16% | 10% | 11% | 11% | 5% | 2% | |||||||||||||||||||||||
| Building, Construction | 3% | 8% | 3% | 5% | 7% | 3% | 5% | 6% | |||||||||||||||||||||||
| Industrial Equipment | 21% | 17% | 13% | 20% | 13% | 19% | 23% | 12% | |||||||||||||||||||||||
| Consumer Products | 3% | 2% | 6% | 2% | 5% | 3% | 4% | 3% | |||||||||||||||||||||||
| Agro-Food | 10% | 3% | 8% | 5% | 8% | 9% | 6% | 7% | |||||||||||||||||||||||
| Healthcare-Pharmaceuticals | 12% | 9% | 8% | 13% | 6% | 4% | 8% | 12% | |||||||||||||||||||||||
| Wholesale, Retail | 6% | 6% | 7% | 4% | 7% | 9% | 5% | 7% | |||||||||||||||||||||||
| Transport | 11% | 11% | 8% | 9% | 3% | 11% | 7% | 7% | |||||||||||||||||||||||
| TMT | 20% | 16% | 18% | 20% | 14% | 21% | 23% | 22% | |||||||||||||||||||||||
| Business and Consumer Services | 10% | 15% | 13% | 12% | 26% | 10% | 14% | 22% | |||||||||||||||||||||||
Argos Mid Market Index - List of Underlying Transactions
H1 2004 - H2 2004 - H1 2005 - H2 2005 - H1 2006 - H2 2006 - H1 2007 - H2 2007 - H1 2008 - H2 2008 - H1 2009 - H2 2009 - H1 2010 - H2 2010 - H1 2011 - H2 2011 - H1 2012 - H2 2012 - H1 2013 - H2 2013 - H1 2014 - H2 2014 - H1 2015 - H2 2015 - H1 2016 - H2 2016 - H1 2017 - H2 2017 - H1 2018 - H2 2018 - H1 2019
| Date | Acquirer | Target | Country | Industries | Valuation multiples | See details |
|---|---|---|---|---|---|---|
| 19/06/2019 | Rejlers | Regional Business Unit of Neste Engineering Solutions | Finland | Engineering and Technology Consulting | * | 95266 |
| 12/06/2019 | Boulanger | Krefel | Belgium | Home Appliance (retail), IT & Telecom Products (retail), Consumer Electronics (retail) | * | 95227 |
| 11/06/2019 | Inter Primo | Essentra Extrusion | Netherlands | Plastics Engineering | *** | 94971 |
| 11/06/2019 | Compass Group | Fazer Food Services | Finland | Catering | ** | 95030 |
| 13/05/2019 | FM Mattsson Mora Group | Hot Bath | Netherlands | Building Materials & Fixtures | * | 94823 |
| 13/04/2019 | Revenio Group Oyj | CenterVue | Italy | Medical Equipment | *** | 95156 |
| 11/04/2019 | Grafton Group | Polvo | Netherlands | Distribution of Materials & Equipment for Buildings / Public Works | ** | 94564 |
| 29/03/2019 | Private Group Led By LBO France | Groupe Infodis | Paris | IT Consulting & Services, Engineering and Technology Consulting | * | 94347 |
| 20/03/2019 | Compagnie des Alpes | Familypark | Austria | Amusement Park | *** | 93720 |
| 01/03/2019 | Private Group led by Archimed | Bomi Italia | Italy | Trucking, Logistics Services | *** | 94294 |
| 27/02/2019 | Private Group Led by Future French Champions | Moving Group | Paris | Fitness Centers | * | 93385 |
| 21/02/2019 | Private Group Led by Parquest Capital and Amundi Private Equity Funds | Eduservices | Hauts-De-Seine | Training | * | 93835 |
| 14/02/2019 | Larsen & Toubro Infotech (LTI) | NIELSEN+PARTNER Unternehmensberater (N+P) | Germany | System Integration | *** | 95147 |
| 21/01/2019 | Private group led by Idia Capital Investissement, Amundi Private Equity Funds, Socadif and Andera Partners (ActoMezz) | Bioclinic (SELAS BIO-CLINIC) | Hauts-De-Seine | Medical Diagnostic Laboratory | * | 94685 |
| 16/01/2019 | Private group led by Ardian | Revima Group | Seine-Maritime | Aerospace & Defence, Services to the Industrial Transportation Sector | * | 93317 |
| 11/01/2019 | Dana | SME | Italy | Electrical Components & Equipments, Powertrain | * | 95194 |
Argos Mid-Market Index Breakdown
Access restricted to "Epsilon Eurozone Data" subscribers.
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NB: This part includes the transaction multiples (median, LTM):
I- Breakdown per main industry sectors
- Energy, Raw Materials, and Chemicals
- Building - Construction
- Industrial Equipment
- Consumer Products
- Agro-food
- Healthcare - Pharma
- Wholesale - Retail
- Transport
- TMT (Technology, Media, Telecommunications)
- Business and Consumer Services
II- Breakdown per main Euro Zone countries
- Germany
- France
- Italy
- Spain - Portugal
- Benelux
Euro Zone Mid Market M&A Trends
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NB: This part includes the following data:
- Euro zone M&A mid market activity (volume & value)
- Share of foreign buyers within industrial buyers
- Breakdown of foreign buyers (Europe -non Euro zone, North America, Asia, RoW)
- Share of listed buyers within industrial buyers
Euro Zone Mid Market LBO Trends
Access restricted to "Epsilon Eurozone Data" subscribers.
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NB: This part includes the following data:
- Euro zone LBO mid market activity (volume & value)
- Euro zone LBO exit mid market activity (volume & value)
- Share of SBOs within LBO exits
Argos Mid Market Index - Methodology
The Argos Mid-Market Index measures the evolution of euro zone private mid market company valuations.
Carried out by Epsilon Research for Argos Soditic and published every quarter, it reflects median EV/EBITDA multiples, on a six-month rolling basis, of mid market M&A transactions in the euro zone.
The preparation of the Argos Mid-Market Index is based on a rigorous methodology and in-depth scrutiny of M&A transactions making up the sample :
- Choice of the relevant multiple: the EV/EBITDA multiple is the most suitable for a European index as it is not impacted by the target’s financial structure nor by its policies regarding depreciation and provisioning (which vary in time and between countries). It is also the closest readily available proxy for operating cash flow.
- Sample of M&A transactions analysed, using the following criteria :
- acquisition of a majority stake,
- target based in a euro zone country,
- mid market : equity value in the €15-500m range (€15-150m up to H1 2013; €15-500m from H2 2013 onwards),
- certain activities excluded (financial services, real estate, high-tech),
- availability of relevant target financial data.
- Information sources are those used by Epsilon Research to prepare analysis reports on transactions available in its EMAT database:
- Professional partner databases such as: CorpfinDeals (transactions), CompanyQuery (company accounts),
- Publicly available information: company accounts, press releases, annual reports (buyers / sellers), press articles, etc.
- Comprehensive analysis of each transaction identified: research covering all available information; verifying, cross-checking, restating financial data; analysis of target activity and of the context of the deal; calculating and analysing acquisition multiples; rating the reliability of multiples.
The Index in perspective:
Following its launch in December 2006, the Argos Mid-Market Index has become a leading reference for private transactions, used by private equity funds, M&A advisors, investment banks, and accountants.
The strict methodology followed guarantees that the index is rigorous, relevant, stable and transparent. The goal is to offer market professionals and company managers a reference tool for understanding the evolution of acquisition prices in private company transactions.
|
The Index is only an indication of the evolution of private company prices. It is relevant in relative, not absolute, value. The Index was not designed as a business valuation tool and cannot be used directly to value a company. |
In partnership with
Index source of information:
EMAT - Epsilon Multiple Analysis Tool™
The Reference Source for Private Company Acquisition Multiples
