THE ARGOS MID-MARKET INDEX
Latest release (Dec 2011) - Increase in mid market valuations driven by the strategic buyers
As of December 2011, valuations of euro zone private mid market companies stood at 7.5x EBITDA, an increase of 14% compared to 2010.
Paris, 21rst February 2012
Although M&A mid market activity in the 2nd half of 2011 decreased sharply (-13% in volume compared to the previous half-year), the acquisition multiples remained largely unaffected: the multiples paid by the strategic buyers grew from 6.9x in June 2011 to 7.5x EBITDA in December, thus rising again to the level of valuations of LBO transactions which have stayed practically unchanged at 7.5x EBITDA.
Regarding the strategic buyers, the prices have been driven by foreign industrial buyers, in particular North American, who have continued to show a growing appetite for mid market companies in the euro zone: they now account for more than 40% of industrial acquisitions compared to 26% two years earlier.
LBO funds increasingly focus on the most attractive companies and no longer on the volume of transactions. The number of LBO transactions fell by 20% since the previous half-year, due both to the continuously difficult financing conditions and to the fact that a number of LBO funds are preparing to enter a new fund raising phase, and are thus less active on the acquisitions side.
> Index next release : May 22nd, 2012
ABOUT THE 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 reflects median EV/EBITDA multiples, on a twelve-month rolling basis, of mid-market M&A transactions (Equity Value in the €15-150m range) in the euro zone. The index now covers a period of 8 years (since 1 January 2004).
Since its launching in December 2006, the Argos Mid-Market index has become a leading reference for players in private markets, such as private equity funds, M&A advisors, investment banks, and accountants. But it only tracks price movements for unlisted businesses, indicating relative values. It is not designed as a business valuation tool.
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 Argos Mid-Market half-yearly index meets a growing demand from the market for rigorous, objective and transparent information. This demand is due to an increase in mid-market M&A deals, where market prices lack visibility, as well as to the growing role of private equity in the European economy and the evolution of professional standards (EVCA/AFIC) and accounting norms (IFRS).
Information sources are those used by Epsilon Research to prepare analysis reports on transactions available in its EMAT database:
- professional partner databases: 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.