PHILADELPHIA (October 29, 2015) – CMF Associates, a leading provider of financial, operational, and human capital solutions to private equity, middle-market, and small cap public companies, today released the results of surveys completed by private equity executives at the M&A East Conference in Philadelphia, PA, October 13-14, 2015, and compared them with the results from the same surveys conducted at M&A East in 2014, 2013, and 2012.
Surveyed purchase multiples in Fall 2015 show some parity with Fall of 2014 with 29% of respondents indicating a purchase multiple in the 7X range in 2015 versus 32% in 2014. However, approximately 32% of respondents indicated a purchase multiple in the greater than 9X range versus 19% in the same range from Fall 2014; a 68% increase. Qualitatively, from what we heard during our 50+ meetings at the conference, many PE groups are continuing to venture into these high multiple ranges in order to compete with strategic buyers and larger investment groups coming down market when they see attractive add-on investments.
Secondly, the peak average time to close a deal has held steady in the four to six month range, comparing Fall 2015 and Fall 2014, however we did see nearly a 20% point decrease in the number of respondents reporting this range (45% in 2015 and 65% in 2014). What is interesting to note here is that the data indicates timing on deal processes is skewing further out in terms of timing than in years prior.
Finally, there is tempered optimism within the portfolio regarding expected aggregate revenue growth in 2015, with the peak (almost 70% of respondents) in the 5-10% anticipated growth range, an increase of over 16% from the prior year. Generally we have seen similar peaks in years past, but this year the data indicates respondents are trending down from the 10-20% range to the 5-10% range.
Read full press release and view graphs here.