Published: February 11, 2022, Peter Rikhof
In the first half of 2020, the number of sales transactions in the SME takeover market fell 41%. The average sales price was more than 5% lower, with the average price paid for an SME business being 4.7 times gross profit.
These are the main results of the Takeover Barometer, the periodic research of takeover platforms Brookz and Dealsuite on figures and trends in the Dutch takeover market. The survey was conducted among 261 Dutch merger & acquisition advisory firms focusing on businesses with revenues between 0.5 and 30 million euros.
Meanwhile, the acquisition market is also feeling the effects of the corona crisis. The number of buy and sell transactions in Dutch SMEs fell sharply in the first six months of 2020 compared to the second half of 2019. The number of businesses sold fell by as much as 41%. It is also notable that the share of larger transactions (deal value greater than €5 million) within the total number of transactions decreased from 35% to 25%. In other words, three-quarters of all transactions in the SME market had a deal value of less than €5 million.
Compared to 6 months ago, transaction prices also decreased in most sectors. The average price paid for an SME business was 4.7 times gross profit, down 5% from the second half of 2019. But the differences by sector are large: the biggest price declines were seen in the Hospitality, Tourism & Recreation (-10%), Retail (-7.1%) and Automotive, Transport & Logistics (-6.5%) sectors. On the other hand, there are sectors where sales prices increased slightly: E-commerce (+3.8%), Healthcare & Pharmaceuticals (+1.6%) and IT Services & Software Development (+0.8%) managed to achieve higher transaction prices even in this coronacrisis.
According to Floyd Plettenberg, partner at Brookz and Dealsuite, the differences in price development by sector are a confirmation of a trend that has been going on for some time: 'IT software, Healthcare & Pharmaceuticals and E-commerce are the winners of the corona crisis: these sectors were already doing well and are now also benefiting from government restrictive measures and growing demand for healthcare and pharmaceuticals. We see the same picture in countries like Germany, France and the UK where we operate with our international platform Dealsuite.
The outlook for the second half of 2020 is moderately positive. Although the number of new assignments in the first half of 2020 declined for more than 40% of all advisers, 20% of acquisition advisory firms actually won more assignments. Overall, the acquisition market for SME businesses is expected to rebound in the coming months. Expressed in a report grade, acquisition advisory firms give a 6.6 for the expected acquisition climate in the second half of 2020, compared to a 5.7 for the first six months of this year.
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