Brookz Takeover Barometer H1-2019: German SME businesses nearly 20% more expensive

An average German SME business is paid 19.2% more than a comparable Dutch SME business. On average, an SME business in Germany is sold for 5.9 times gross profit (EBITDA), compared to 4.95 times gross profit in the Netherlands.

This is one of the results of the Takeover Barometer, the periodic research by takeover platforms Brookz and Dealsuite on figures and trends in the takeover market. The survey was conducted among 262 Dutch and 289 German merger & acquisition advisers (approx. 1,700 advisers) focusing on businesses with revenues between 0.5 and 30 million euros.

Price differences rising to over 45%

The biggest difference in sales revenue is recorded in the Automotive, Transport & Logistics sector. In Germany, 5.7 times EBITDA is paid for a company in this sector against an average of 3.85 times EBITDA in the Netherlands. The highest average EBITDA multiple is paid in both the Netherlands and Germany for businesses in the IT & Online sector. The multiple paid in this sector is 8.0 in Germany and 6.25 in the Netherlands. The only sector in which a lower average EBITDA multiple is paid in Germany than in the Netherlands is the Wholesale sector. For a company in this sector, the average EBITDA multiple in the Netherlands is 5.65 compared to 5.2 in Germany. A difference of 0.45 in favor of Dutch wholesalers.

German buyers are willing to pay more

According to Floyd Plettenberg, partner at Brookz and responsible for the Takeover Barometer, for starters, it is a big step forward that now, for the first time, the multiples of Dutch and German SME businesses can be compared. Plettenberg: 'It is the mission of the platforms Brookz and Dealsuite to create transparency and insight. These comparative figures certainly contribute to that.' The fact that an average German SME business pays almost 20% more than a comparable Dutch SME business did not surprise Plettenberg: 'Germans have many demands, but they are also willing to pay for them. Given the large price difference, it is therefore attractive for Dutch entrepreneurs to be open to German buyers. With the market becoming increasingly transparent and accessible, this is also possible.'

Dutch takeover market robust

Across sectors, both the number of transactions and prices paid have remained stable over the past 6 months. Thereby, for the Dutch takeover market, one can still speak of a robust, high level of activity and prices. The outlook for the second half of 2019 is still good, but slightly less positive than half a year ago: over 84% of acquisition advisory firms (was 91%) expect the SME acquisition market to remain stable or continue to pick up over the next 6 months. A minority of 16% expect the market to deteriorate. Expressed as a report grade, acquisition advisory firms give a 7.4 for the expected acquisition climate in the second half of 2019, compared to a 7.6 for the first six months of this year.