Brookz Takeover Barometer H1-2021: Takeover market finally recovered

In the first half of 2021, the Dutch takeover market has definitely recovered. The number of sales transactions increased by 21 percent. This puts the takeover market back at the level it was before the corona crisis.

This is one of the main findings of the Takeover Barometer, the periodic research by takeover platforms Brookz and Dealsuite on figures and trends in the Dutch takeover market. The survey was conducted among 268 Dutch merger & acquisition advisory firms focusing on businesses with revenues between 0.5 and 30 million euros.

Sector differences

As in the second half of 2020, there are major differences between sectors, though. In particular, more businesses were sold over the past 6 months in the E-commerce and Media, Advertising & Communications and Automotive, Transport & Logistics sectors. The least transactions took place in the Hospitality, Tourism and Recreation sector. In fact, the share of business sales in the Hospitality, Tourism and Recreation sector fell by 70 percent. In addition, more larger businesses were sold again in the past 6 months: the share of transactions with a deal value above €10 million rose from 9% to 11%.

K-shaped recovery

The average price paid for an SME business in the first half of 2021 was 4.85 times gross profit, the same as in the second half of the 2020. However, this is another K-shaped recovery. Average Ebitda multiples for businesses in the IT Services & Software Development (6.55), Healthcare & Pharmaceuticals (6.3), Agri & Food (5.65) and E-commerce (5.65) sectors went up slightly. For businesses in the Hospitality, Tourism & Recreation (3.2) and Retail (2.95) sectors, average prices paid were lower than in the second half of 2020.

Sustainability increasingly important

This edition of the Takeover Barometer was the first to examine the impact of ESG on the valuation of SME businesses. ESG stands for Environmental, Social and Governance and refers to the three central factors in measuring the sustainability of a business.

According to Floyd Plettenberg, partner at Brookz and Dealsuite, sustainability issues are increasingly being considered when buying a business: "Consumers are increasingly buying from businesses that value sustainability. In the business acquisition market, interest in sustainable businesses is therefore also increasing. The inclusion of ESG factors in the investment decision will therefore become standard in the coming years." According to the participating advisers, ESG is already a formal subject of the investment decision in 32% of cases; Already it weighs heavily or even decisively in only 3% of cases. An overwhelming majority of all advisers (86%) expect the impact of ESG on the business value of SMEs to increase in the future.

Outlook

The outlook for acquisition market in the second half of 2021 is downright positive. A majority of all advisers (60%) think the takeover market will continue to pick up or at least remain stable (37%) over the next 6 months. Only 3% of all advisers think the market will deteriorate in the next 6 months. Advisers rate the market for the next 6 months at 7.7, up from 7.1 six months ago.