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Quarterly Edition, Q3 2019_____________________
> Detailed Data on Euro Zone Multiples
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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 reach new historic high of 10.1x EBITDA
Argos Wityu, the independent European investment fund, and Epsilon Research, the online platform for the management of M&A transactions on unlisted companies, today published the mid-market Argos Index® for the 3rd 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.
The mid-market Argos Index® has remained remarkably stable at a historically high level. However, this stability conceals two underlying differences:
- A steady difference between the multiples paid by strategic buyers, which increased to 11.0x EBITDA this quarter, and those paid by private equity funds, which were virtually stable at 9.6x EBITDA.
- Multiples of listed mid-market companies in the Eurozone stood at 8.4x EBITDA, which is 30% below the acquisition multiple for unlisted mid-market companies in the Eurozone, at 11.0x EBITDA. The gap is narrower for acquisitions made by private equity funds.
M&A activity in Europe continues to slow due to a sharp decline in the number of institutional sellers
The reversal of the M&A market’s upward trajectory (in volume) that began in early 2019 has been confirmed by a decline in value of 11% worldwide and 32% in Europe. Eurozone mid-market M&A activity followed the same trend in Q3 2019, declining 26% in volume and 34% in value compared to the second quarter.
Although the volume of private equity exits has been stable for several years, the number of corporate sales of subsidiaries has fallen since 2018. This decline sharpened in Q3 2019. Divestiture of subsidiaries, once the principal source of unlisted transactions, now only accounts for 30% of them. This lack of supply partly explains the volume decline, despite it being a seller’s market.
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Argos Mid Market Index - Sample Analysis
| H1 2016 | H2 2016 | H1 2017 | H2 2017 | H1 2018 | H2 2018 | H1 2019 | Q3 2019 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Sample Size | ||||||||||||||||||||||||||||||||
| # deals retained for the index | 92 | 104 | 85 | 89 | 92 | 105 | 100 | 102 | ||||||||||||||||||||||||
| Average Equity Value (€m) | 134.6 | 128.5 | 149.7 | 140.5 | 142.0 | 115.7 | 112.6 | 106.2 | ||||||||||||||||||||||||
| Average N-1 sales (€m) | 158.4 | 133.3 | 131.2 | 113.3 | 130.0 | 112.0 | 124.4 | 114.9 | ||||||||||||||||||||||||
| N-1 EBITDA margin | 14% | 12% | 15% | 14% | 13% | 15% | 13% | 14% | ||||||||||||||||||||||||
| N-1 EBIT margin | 9% | 9% | 8% | 12% | 8% | 8% | 9% | 10% | ||||||||||||||||||||||||
| Breakdown by size (equity value) | ||||||||||||||||||||||||||||||||
| [15-49] €m | 25% | 37% | 27% | 25% | 28% | 36% | 31% | 39% | ||||||||||||||||||||||||
| [50-99] €m | 29% | 15% | 18% | 18% | 21% | 20% | 24% | 22% | ||||||||||||||||||||||||
| [100-150] €m | 17% | 12% | 13% | 22% | 16% | 18% | 19% | 16% | ||||||||||||||||||||||||
| Breakdown by deal type | ||||||||||||||||||||||||||||||||
| Acquisition | 65% | 69% | 65% | 67% | 74% | 71% | 65% | 73% | ||||||||||||||||||||||||
| LBO | 35% | 31% | 35% | 33% | 26% | 29% | 35% | 27% | ||||||||||||||||||||||||
| Breakdown by country | ||||||||||||||||||||||||||||||||
| France | 34% | 28% | 35% | 28% | 32% | 34% | 49% | 39% | ||||||||||||||||||||||||
| Germany | 16% | 20% | 14% | 13% | 15% | 20% | 14% | 12% | ||||||||||||||||||||||||
| Italy | 26% | 13% | 15% | 19% | 14% | 15% | 13% | 22% | ||||||||||||||||||||||||
| Benelux | 4% | 13% | 12% | 11% | 13% | 15% | 10% | 10% | ||||||||||||||||||||||||
| Spain | 7% | 13% | 11% | 14% | 4% | 6% | 3% | 5% | ||||||||||||||||||||||||
| Other (euro zone) | 13% | 13% | 13% | 15% | 22% | 10% | 11% | 12% | ||||||||||||||||||||||||
| Breakdown by sector | ||||||||||||||||||||||||||||||||
| Energy and Raw Materials | 13% | 16% | 10% | 11% | 11% | 5% | 2% | 8% | ||||||||||||||||||||||||
| Building, Construction | 8% | 3% | 5% | 7% | 3% | 5% | 6% | 7% | ||||||||||||||||||||||||
| Industrial Equipment | 17% | 13% | 20% | 13% | 19% | 23% | 12% | 17% | ||||||||||||||||||||||||
| Consumer Products | 2% | 6% | 2% | 5% | 3% | 4% | 3% | 4% | ||||||||||||||||||||||||
| Agro-Food | 3% | 8% | 5% | 8% | 9% | 6% | 7% | 9% | ||||||||||||||||||||||||
| Healthcare-Pharmaceuticals | 9% | 8% | 13% | 6% | 4% | 8% | 12% | 11% | ||||||||||||||||||||||||
| Wholesale, Retail | 6% | 7% | 4% | 7% | 9% | 5% | 7% | 6% | ||||||||||||||||||||||||
| Transport | 11% | 8% | 9% | 3% | 11% | 7% | 7% | 1% | ||||||||||||||||||||||||
| TMT | 16% | 18% | 20% | 14% | 21% | 23% | 22% | 15% | ||||||||||||||||||||||||
| Business and Consumer Services | 15% | 13% | 12% | 26% | 10% | 14% | 22% | 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 - Q3 2019
| Date | Acquirer | Target | Country | Industries | Valuation multiples | See details |
|---|---|---|---|---|---|---|
| 30/09/2019 | Huber+Suhner | BKtel Group | Germany | Telecommunications equipment | * | 96406 |
| 18/09/2019 | Coca-Cola HBC | Acque Minerali (“Lurisia”) | Italy | Bottled Mineral Water | ** | 96411 |
| 16/09/2019 | Timken Co | Baier & Koppel | Germany | Industrial Components | * | 96538 |
| 16/09/2019 | Scandinavian Tobacco Group | Royal Agio Cigars | Netherlands | Food & Beverage Industry | ** | 96251 |
| 09/09/2019 | REMONDIS SE & Co. KG | Reym | Netherlands | Waste & Disposal Services, Industrial Cleaning | ** | 96401 |
| 05/08/2019 | Cellink | Cytena | Germany | Medical Equipment | ** | 95828 |
| 26/07/2019 | Sheela Foam | Interplasp | Spain | Composite Materials | * | 96330 |
| 25/07/2019 | Lagardere Travel Retail | International Duty Free Belgium | Belgium | Diversified R&W | ** | 95841 |
| 16/07/2019 | Focusrite | Pro Audio | Germany | Audio Equipment Manufacturers | ** | 95677 |
| 04/07/2019 | Peab | Nordic Paving and Mineral Aggregates Business of YIT | Finland | Building Materials & Fixtures, Mining | *** | 95807 |
| 03/07/2019 | Fane Valley Co-Operative Society | Robert Smyth & Sons | Ireland | Animal Feed | ** | 96238 |
| 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 | Compass Group | Fazer Food Services | Finland | Catering | ** | 95030 |
| 11/06/2019 | Inter Primo | Essentra Extrusion | Netherlands | Plastics Engineering | *** | 94971 |
| 28/05/2019 | Private Group led by Raise Investissement | Children Worlwide Fashion (CWF) | Vendée | Children Clothing | * | 95349 |
| 13/05/2019 | FM Mattsson Mora Group | Hot Bath | Netherlands | Building Materials & Fixtures | * | 94823 |
| 09/05/2019 | Private Group led by Bpifrance and Siparex Mezzanine | Camerus | Val-D'Oise | Rental Services | * | 94884 |
| 11/04/2019 | Grafton Group | Polvo | Netherlands | Distribution of Materials & Equipment for Buildings / Public Works | ** | 94564 |
| 01/04/2019 | Danone | Michel et Augustin | Hauts-De-Seine | Dairy Products & Ice Creams, Bakery Products | * | 94979 |
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
Access restricted to "Epsilon Eurozone Data" subscribers.
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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.
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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
