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Quarterly Edition, Q3 2018_____________________
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Argos Mid-Market Index
Evolution of Euro Zone Mid-Market Private Company Prices - Quarterly Index carried out by Epsilon Research
Acquisition prices of non-quoted European SMEs stabilized at record high level, at 9.8x EBITDA
Prices have been driven by the recovery in M&A mid-market activity in the Eurozone in the 3rd quarter, which is back to 2017 levels.
The political unrest in Europe and international commercial tensions have not yet had an impact on this dynamic.
This stabilization at a record high level of non-quoted European SMEs reflects two different evolutions.
On the one hand, prices paid by strategic buyers remain high at 9.9x EBITDA. They continue to be sustained by large quoted groups, which represent 68% of strategic buyers this quarter, and by overseas buyers (58%).
On the other hand, prices paid by private equity funds have decreased by 5% to 9.3x EBITDA. Even if prices remain at a high level, this decrease depicts strong discipline in acquisition prices paid by European fund managers. This sign of moderation is also depicted in reasonable levels of current debt leverage (debt financing reaches 50% of enterprise value vs. 65% in 2007, in a context where interest rates are much lower than in 2007).
Despite high pricing, the non-quoted sector continues to attract investors, as witnessed by the continued increase of funds raised and dry powder.
The valuation multiple of quoted Mid-Market groups have decreased in the 3rd quarter to 9x EBITDA, after an upward trend since end 2011. Our next publication will confirm or otherwise if this shift has an impact on acquisition multiples of non-quoted targets.
You can download the full study under "Data Publication" (left)
Next Index: Feb. 2019
Argos Mid Market Index - Sample Analysis
| H1 2015 | H2 2015 | H1 2016 | H2 2016 | H1 2017 | H2 2017 | H1 2018 | Q3 2018 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sample Size | ||||||||||||||||||||||||||||||
| # deals retained for the index | 98 | 100 | 92 | 104 | 85 | 89 | 92 | 102 | ||||||||||||||||||||||
| Average Equity Value (€m) | 124.0 | 109.2 | 134.6 | 128.5 | 149.7 | 140.5 | 142.0 | 129.3 | ||||||||||||||||||||||
| Average N-1 sales (€m) | 154.8 | 120.8 | 158.4 | 133.3 | 131.2 | 113.3 | 130.0 | 126.2 | ||||||||||||||||||||||
| N-1 EBITDA margin | 16% | 15% | 14% | 12% | 15% | 14% | 13% | 16% | ||||||||||||||||||||||
| N-1 EBIT margin | 11% | 10% | 9% | 9% | 8% | 12% | 8% | 12% | ||||||||||||||||||||||
| Breakdown by size (equity value) | ||||||||||||||||||||||||||||||
| [15-49] €m | 36% | 42% | 25% | 37% | 27% | 25% | 28% | 34% | ||||||||||||||||||||||
| [50-99] €m | 21% | 29% | 29% | 15% | 18% | 18% | 21% | 18% | ||||||||||||||||||||||
| [100-150] €m | 12% | 6% | 17% | 12% | 13% | 22% | 16% | 16% | ||||||||||||||||||||||
| Breakdown by deal type | ||||||||||||||||||||||||||||||
| Acquisition | 65% | 22% | 35% | 69% | 65% | 67% | 26% | 72% | ||||||||||||||||||||||
| LBO | 35% | 78% | 65% | 31% | 35% | 33% | 74% | 28% | ||||||||||||||||||||||
| Breakdown by country | ||||||||||||||||||||||||||||||
| France | 30% | 25% | 34% | 28% | 35% | 28% | 32% | 36% | ||||||||||||||||||||||
| Germany | 17% | 15% | 16% | 20% | 14% | 13% | 15% | 14% | ||||||||||||||||||||||
| Italy | 23% | 24% | 26% | 13% | 15% | 19% | 14% | 22% | ||||||||||||||||||||||
| Benelux | 14% | 17% | 4% | 13% | 12% | 11% | 13% | 13% | ||||||||||||||||||||||
| Spain | 8% | 9% | 7% | 13% | 11% | 14% | 4% | 5% | ||||||||||||||||||||||
| Other (euro zone) | 8% | 10% | 13% | 13% | 13% | 15% | 22% | 10% | ||||||||||||||||||||||
| Breakdown by sector | ||||||||||||||||||||||||||||||
| Energy and Raw Materials | 10% | 4% | 13% | 16% | 10% | 11% | 11% | 9% | ||||||||||||||||||||||
| Building, Construction | 9% | 3% | 8% | 3% | 5% | 7% | 3% | 6% | ||||||||||||||||||||||
| Industrial Equipment | 18% | 21% | 17% | 13% | 20% | 13% | 19% | 25% | ||||||||||||||||||||||
| Consumer Products | 2% | 3% | 2% | 6% | 2% | 5% | 3% | 5% | ||||||||||||||||||||||
| Agro-Food | 5% | 10% | 3% | 8% | 5% | 8% | 9% | 4% | ||||||||||||||||||||||
| Healthcare-Pharmaceuticals | 8% | 12% | 9% | 8% | 13% | 6% | 4% | 4% | ||||||||||||||||||||||
| Wholesale, Retail | 13% | 6% | 6% | 7% | 4% | 7% | 9% | 8% | ||||||||||||||||||||||
| Transport | 8% | 11% | 11% | 8% | 9% | 3% | 11% | 6% | ||||||||||||||||||||||
| TMT | 21% | 20% | 16% | 18% | 20% | 14% | 21% | 20% | ||||||||||||||||||||||
| Business and Consumer Services | 6% | 10% | 15% | 13% | 12% | 26% | 10% | 13% | ||||||||||||||||||||||
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 - Q3 2018
| Date | Acquirer | Target | Country | Industries | Valuation multiples | See details |
|---|---|---|---|---|---|---|
| 28/09/2018 | Hexpol | Mesgo | Italy | Specialty Chemicals | ** | 91592 |
| 27/09/2018 | Chart Industries | VRV | Italy | Containers | *** | 91616 |
| 26/09/2018 | Systemair | Koolair | Spain | Heating Components & Equipments | * | 91609 |
| 20/09/2018 | OnePoint | Weave | Paris | Business and Management Consultancy | * | 91341 |
| 18/09/2018 | Certify | Captio Tech S.L. | Spain | Enterprise Content Management (ECM) | * | 91397 |
| 03/09/2018 | Bilia | Verstraeten & Gent Store by Verstraeten | Belgium | Car Dealers | * | 91203 |
| 21/08/2018 | Vivalto Sante | Capio Gestion | Rhône | Clinics and hospitals | *** | 90851 |
| 09/08/2018 | WiseTech Global | Taric | Spain | Transport Management System (TMS) | ** | 90744 |
| 03/08/2018 | Private Group Led by Alpha Private Equity | Calligaris | Italy | Furnishings | * | 91571 |
| 30/07/2018 | Teijin Frontier Co | JH Ziegler GmbH & Co | Germany | Synthetic Fibers / Nonwoven fabrics | ** | 90812 |
| 12/07/2018 | HIL | Parador | Germany | Building Materials & Fixtures | *** | 91495 |
| 03/07/2018 | Altus Group | Taliance Group | Paris | Private & I-banking software, Real Estate Software | ** | 90023 |
| 02/07/2018 | Koole Tankstorage Zaandam | Odfjell Terminals Rotterdam (OTR) & Odfjell Terminals Maritiem | Netherlands | Services to the Industrial Transportation Sector | ** | 91348 |
| 29/06/2018 | Private Group led by MBO Partneraires | Laboratoires Embryolisse | Hauts-De-Seine | Personal Products | * | 90252 |
| 28/06/2018 | Private Group led by Certares, Africinvest and Bpifrance | Marietton Group | Auvergne | Travel & Tourism | ** | 90150 |
| 27/06/2018 | Private Group led by Intermediate Capital Group (ICG) | Etanco | Paris | Building Materials & Fixtures, Machining Operations | * | 90226 |
| 27/06/2018 | Private Group led by Groupe HLD, Etoile ID and ACE Management | Rafaut | Hauts-De-Seine | Machining Operations, Aircraft Parts Suppliers | ** | 90373 |
| 14/06/2018 | Interface | Nora Systems | Germany | Building Materials & Fixtures | ** | 89968 |
| 13/06/2018 | Twin Disc | Veth Propulsion | Netherlands | Industrial Machinery, Ship manufacturers & suppliers | *** | 89959 |
| 13/06/2018 | Private Group led by Qualium Investissement | Eurodommages | Gironde | Insurance Brokerage | * | 89733 |
| 07/06/2018 | Private Group led by EMZ Partners and BNP Paribas Developpement | Diam International | Yvelines | Promotional Products | ** | 90299 |
| 06/06/2018 | Private Group led by Eurazeo and Naxicap Partners | 2RH (Shark Helmets) | Bouches-Du-Rhône | Accessories (manufacture) | ** | 90340 |
| 01/06/2018 | Metair Investments | Tovarna Akumulatorskih Baterij (TAB) | Slovenia | Electrical Components & Equipments, CleanTech - Power Storage | ** | 89628 |
| 31/05/2018 | Huhtamaki | Cup Print Unlimited | Ireland | Paper Packaging Manufacturers | ** | 89532 |
| 30/05/2018 | Private Group led by CM-CIC Investissement | RC Concept | Hauts-De-Seine | Outdoor Advertising | * | 90305 |
| 30/05/2018 | Private Group led by Arkéa Capital Investment and Motion Equity Partners | Holweg Weber | Bas-Rhin | Processing and Packaging Machinery | * | 90334 |
| 25/05/2018 | Sumitomo Heavy Industries | Lafert | Italy | Electrical Components & Equipments | ** | 89604 |
| 25/05/2018 | Private Group led by Apax Partners | Expereo | Netherlands | IT Service Providers | * | 89554 |
| 24/05/2018 | Smurfit Kappa Group | Reparenco | Netherlands | Wood & Paper Reclycling | *** | 89511 |
| 23/05/2018 | Mitek | A2iA | Paris | Artificial Intelligence (AI) | ** | 89588 |
| 22/05/2018 | Pandora | Pandora Network in Ireland | Ireland | Jewellery & Watches (retail) | * | 89544 |
| 21/05/2018 | Pacific Industrial | Schrader Valves Business of Sensata Technologies | Netherlands | Pumps & PVF | *** | 89539 |
| 18/05/2018 | Private Group led by IK Investment Partners | Domia Group | Paris | Schools, Home Help Services | * | 90416 |
| 16/05/2018 | Volex | Silcotec Europe | Ireland | Cables & Wires Manufacturers | * | 89334 |
| 09/05/2018 | Adesto Technologies Corporation | S3 Semiconductors | Ireland | Semiconductors | ** | 89251 |
| 07/05/2018 | Delta Galil Industries | Eminence | Gard | Lingerie | * | 89749 |
| 04/05/2018 | Lantmannen Agro | Cattle Feed Business of Raisio | Finland | Animal Feed, Horticulture | *** | 89506 |
| 03/05/2018 | Private Group Led by IK Investment Partners | Mademoiselle Desserts (Formerly Eurpéenne des Desserts) | Yvelines | Bakery Products | * | 89516 |
| 03/05/2018 | Zhejiang Semir Garment | Sofiza (Kidiliz) | Paris | Children Clothing | * | 89526 |
| 03/05/2018 | Midsona | Davert | Germany | Bakery Products, Confectionery | *** | 89220 |
| 03/05/2018 | Private Group led by Sagesse Retraite Sante (SRS), Arkéa Capital Investissement, Ouest Croissance | Arenadour | Landes | Thermal Baths & Spas | * | 90997 |
| 24/04/2018 | CS Communication & Systemes | Groupe Novidy's | Yvelines | IT Consulting | *** | 89241 |
| 24/04/2018 | QinetiQ Group | EIS Aircraft Operations | Germany | Services to the Industrial Transportation Sector, Training | *** | 89158 |
| 24/04/2018 | Smyths Toys | Toys R Us - DACH region | Germany | Toys & Gifts (retail) | ** | 89839 |
| 23/04/2018 | IMA Industria Macchine Automatiche | TMC | Italy | Processing and Packaging Machinery | ** | 89320 |
| 20/04/2018 | Private Group Led by Axcel Management | Orion Diagnostica | Finland | Diagnostic Medical Equipment | * | 89193 |
| 11/04/2018 | Aperam | VDM Metals | Germany | Aluminium, Steel | *** | 89153 |
| 11/04/2018 | Private Group led by La Chapelle | NAF NAF | Seine-Saint-Denis | Womenswear | ** | 89503 |
| 10/04/2018 | Exela Technologies | ASTERION International | Germany | Business Process Outsourcing (BPO) | ** | 91482 |
| 02/04/2018 | Samvardhana Motherson Automotive Systems Group | Reydel Automotive Group | Netherlands | Interior Parts | ** | 89168 |
Argos Mid-Market Index Breakdown
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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
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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
