Published: 26 August 2022
Despite inflation and rising interest rates, the Dutch takeover market grew slightly in the first half of this year. Both the number of transactions and average selling prices maintained high levels. However, rising interest rates did impact financing availability and selling prices.
These are the main findings of the Takeover Barometer, the periodic survey of takeover platforms Brookz and Dealsuite on figures and trends in the Dutch takeover market. The survey was conducted among 274 Dutch merger & acquisition advisory firms focusing on businesses with revenues between 0.5 and 30 million euros.
After a substantial increase in the number of mergers and acquisitions in 2021, the growth in the number of transactions continued in the first half of 2022. The number of sales transactions increased by 3% and the number of purchase transactions even by 8%. Broken down by sector, in the first 6 months of 2022 most acquisitions were again made in the Business Services sector (18%). Notable was the decrease in the number of transactions in the Construction & Installation Technology sector (-5%) and Health Care & Pharmaceuticals sector (-3%).
On average, an SME business paid 4.85 times gross profit in the first half of 2022, the same as in the second half of 2021. EBITDA multiples in the IT Services & Software Development (6.6), Healthcare & Pharmaceuticals (6.35) and Agri & Food (5.6) and E-commerce & web shops (5.6) sectors maintained high levels. At the bottom of the ranking, the EBITDA multiple for the Hospitality, Tourism & Recreation sector dropped to 3.3 and the Retail sector from 3.1 to 3.0.
In this Takeover Barometer we asked for the first time about the impact of rising interest rates and inflation on the takeover market. It showed that more than half of all respondents (54%) indicated that this development has a negative impact on the availability of financing and the sale prices to be realized. The impact on the number of newly offered businesses is minimal, although over a quarter of respondents do see a slight negative effect on the number of interested buyers reporting for a business.
According to Floyd Plettenberg, partner at Brookz and Dealsuite, the turbulent macroeconomic developments of recent months are having a limited impact on the takeover market for now. "Despite the depressing effect of the rise in interest rates, no decline in sales prices has yet been observed and the average EBITDA multiple has remained stable. However, we do see that rising interest rates in particular are having a negative impact on the availability of financing."
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