The average sale price of an SME business was around 2.5 million euros over the past six months. Almost one in five businesses was even sold for more than 10 million euros. In all sectors, sales prices increased slightly in the first 6 months of this year.
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 214 merger & acquisition advisory firms (approx. 900 advisers) which together represent more than 90 percent of the SME takeover market (businesses with revenues between 0.5 and 25 million euros).
Rising sales prices
This survey captured 369 sales transactions from the past 6 months. Of these, just over half had a deal value (sales price) of 2.5 million euros or more: 21% had a deal value between 2.5 and 5 million euros, 10% between 5 and 7.5 million euros, and 7% between 7.5 and 10 million euros. 17% of SMEs sold a business for more than 10 million euros. The report also shows that sales prices increased in all sectors except retail over the past six months. Businesses in IT & Online were valued highest at over 6 times gross profit.
Construction & Installation Engineering
The value of businesses in the Construction & Installation Technology sector increased the most in relative terms, now notching nearly 4x gross profit. According to Floyd Plettenberg, partner at Brookz and responsible for the Takeover Barometer, this increase in the value of businesses in the construction sector is not surprising: 'The construction sector has been on the rise for some time, which is now also having its effect on the prices paid for businesses in that sector. Construction companies that narrowly survived the crisis are opting to sell now that the value of their businesses has risen slightly again. This is also evident from the sharp increase in the number of transactions in this sector; namely 60% more transactions than in the period before.'
Outlook
The number of transactions increased 5% in the first 6 months of 2017 compared to the last 6 months of 2016 and the outlook for the second half of 2017 is positive. Eighty percent of acquisition advisory firms expect the SME acquisition market to remain stable or continue to pick up over the next 6 months. A minority of 10 percent expect the market to deteriorate, up from 12 percent 6 months ago. Expressed as a report grade, acquisition advisory firms give a 7.8 for the expected acquisition climate in the second half of 2017, compared to a 7.6 for the first six months of 2017.
