Women rarely take over businesses. In the past decade, only 6% of all business acquisitions involved a woman. Lower risk appetite and a more realistic assessment of opportunities are the main reasons.
This is one of the results of the Brookz Takeover Barometer, the periodic research of takeover platform Brookz, on figures and trends in the takeover market. The survey was conducted among 185 merger & acquisition advisory firms (approx. 750 advisers) which together represent more than 90 percent of the SME takeover market (businesses with revenues between 0.5 and 30 million euros).
Risk-averse
Although the number of women orienting on a business acquisition does increase steadily, for many women the step to actually do it often turns out to be a bridge too far. The main reason given is that women are more risk-averse than men; they simply find the risks too great. The second reason follows that women are generally more realistic than men, they do not overestimate their chances of success. Other reasons that emerged: Women believe more in organic growth, women are less entrepreneurial, and the acquisition market is a man's world, which deters women.
Perception problem
According to Floyd Plettenberg, partner at Brookz and responsible for the Takeover Barometer, the issue is a mutual perception problem: "Women underestimate their chances of a successful business acquisition. And advisers think they can't achieve a successful transaction with a woman. In absolute numbers, there are still few successful cases of business acquisitions by women. As a result, people are quick to think that this also says a lot about the chance of success per individual, but it does not. This wrongly creates a vicious circle that is difficult to break. More and better use of female role models and greater availability of female advisers would certainly help."
Outlook
Although there were approximately 10% fewer transactions in the first six months of 2016 than in the previous six months, the outlook for the rest of 2016 is still moderately positive. A large majority of acquisition advisory firms (60%) expect the SME acquisition market to remain stable. One in five advisers even expect the acquisition market to continue to pick up over the next 6 months. A minority of 16% expect the market to deteriorate; incidentally, a year ago this was only 2%.
Report grade
Expressed in a report grade, acquisition advisory firms give the acquisition climate in the first half of 2016 an average of 6.9. For the expected acquisition climate in the next 6 months, respondents gave an average report grade of 7.1.
EBITDA Multiples by Industry — H1 2016
| Industry |
Multiple H1 2016 |
Adjustment compared to H2-2015 |
| Healthcare & Pharmacy |
5,9 |
+0,1 |
| ICT & Internet |
5,8 |
+0,1 |
| Wholesale* |
5,6 |
+1,25 |
| Agri & Food |
5,35 |
+0,05 |
| Industry & Manufacturing |
5,05 |
+0,05 |
| Business services |
4,8 |
+0,05 |
| Media, Advertising & Communications |
4,6 |
— |
| Hospitality, Tourism & Recreation |
3,95 |
— |
| Construction & Installation Engineering |
3,75 |
+0,05 |
| Retail* |
3,7 |
−0,65 |
| Automotive, Transportation & Logistics |
3,65 |
— |
| Average (calculated) |
4,74 |
— |
* Wholesale and Retail were previously surveyed together as “Wholesale & Retail” (base 4.35); hence the significant adjustments to these two separate categories. Survey date: end of H1-2016. Average calculated across the 11 sectors. Source: Brookz Takeover Barometer H1-2016 (September 2016).
Summary
- In H1-2016, the participating M&A advisory firms advised on 268 acquisition transactions and 331 sale transactions.
- The number of transactions fell by approximately 10% compared to H2-2015, following a 15% decline in the previous period.
- The number of sales transactions facilitated was more than 20% higher than the number of acquisition transactions.
- Healthcare & Pharmaceuticals saw the largest increase: the share of transactions rose by more than 30% compared to H2-2015.
- Nearly 70% of M&A advisory firms saw the number of engagements increase by more than 10% in H1-2016; 20% even saw an increase of more than 25%.
- While the number of transactions declined, the order book continued to grow—a sign that the average lead time from mandate to transaction has increased.
- Only 6.6% of all business acquisitions are led by women, compared to 6% ten years earlier, while 35% of Dutch SME entrepreneurs are women (Chamber of Commerce, 2015).
- Sentiment became moderately more positive: the rating for H1-2016 was 6.9, with an expectation of 7.1 for H2-2016; however, 16% expect a deterioration, compared to just 2% a year earlier.
