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Middle-Market Private Equity Update

By October 19, 2014Newsletters

On October 7th and 8th at the Association for Corporate Growth’s M&A East Conference, CMF met with more than 40 private equity funds to discuss the world of mergers and acquisitions, and the trends they are seeing in the market. To that end, we also conducted a survey on purchase multiples, time to close a deal, and aggregate portfolio sales growth.

The results of our survey were on par with what most of the industry is seeing right now:

  • EBITDA multiples are increasing significantly, with 20% of respondents seeing 9X multiples (or higher), compared to only 4% seeing 9X multiples in 2013; this goes hand-in-hand with Pitchbook, which reported that median valuation multiples for YTD 2014 were 9.7X.
  • Anecdotally, many private equity folks we spoke to said they are venturing into the higher EBITDA multiple range in order to compete with strategic buyers.
  • Average time to close a deal is about four to six months, while Pitchbook is reporting a longer timeline of about 16 months.
  • Anecdotally, funds we spoke to noted situations where deal processes take 30 days, and other situations where deal processes take 12 months or more.
  • Revenue growth at the portfolio for most is expected to be 5-15%; while in 2011 and 2012 more funds expected higher growth rates coming out of the recession, those numbers seem to have calmed down to more steady growth expectations in the 5-10% range.

Click here to read the survey results in full.

Keep a look out for our yearly predictions, which will be released in November!

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