On October 8th and 9th, at ACG’s M&A East conference, CMF conducted our third annual survey of middle-market private equity funds, asking three important questions: what EBITDA multiples are you paying for businesses; how long is it taking to close a deal; and what do you project overall portfolio growth to be over the next year? Our results were as follows:
- In comparing this year’s survey results with the previous two years, we found M&A EBITDA multiples increasing, with a strong upward pull toward the 7X range, versus a strong showing in the 6X multiple range in previous years
- The average time to close a deal remained steady over the past three years in the 4-6 month range, although we are once again seeing funds take 10+ months to close deals and heard many weary anecdotes of extensive diligence processes and wobbly, unsure sellers
- Projected sales growth within the portfolio as a whole remained consistent with prior years as well, with a majority expecting between 5% and 15% growth. We are, however, seeing fewer funds experiencing higher growth rates this year compared to 2012 – the optimism of 2012 seems to have turned, not to pessimism, but to a more muted outlook on growth.
Deal activity in the fourth quarter also appears to be increasing compared to the third quarter – we expect everyone in M&A to be busy.
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