Published: February 11, 2022, Peter Rikhof
Over the past two years, business sales prices have risen significantly. In particular, businesses in the Construction & Installation and IT & Online sectors have become significantly more expensive with average increases of up to 9 percent.
This is one of the results of the Brookz Takeover Barometer, the periodic research by takeover platform Brookz on figures and trends in the takeover market. The survey was carried out among 265 merger & acquisition advisers (approx. 1,200 advisers) who together represent more than 90% of the SME takeover market (businesses with revenues between 0.5 and 25 million euros).
The largest price increase over the past two years was measured for businesses in the Construction & Installation Technology sector. A construction business became 9.2% more expensive on average from fall 2016, followed by businesses in the IT & Online sector (+5.9%), Automotive, Transport & Logistics (+5.5%) and Industry & Manufacturing (+4.9). In the middle are businesses in Business Services (+4.1%) and Agri & Food (3.7%). Retail is the only sector where businesses have become cheaper over the past two years (-1.4%).
The highest prices are paid for businesses in the IT & Online sector. On average, this sector pays 6.25 times the gross profit for a business. Other sectors with high selling prices are Healthcare & Pharmaceuticals (6.05 times gross profit) and Wholesale (5.65 times gross profit). Also in this ranking, businesses in the Retail sector are at the bottom with an average price of 3.6 times gross profit.
In the second half of 2018, the average number of transactions per advisory firm increased by 7% compared to the first six months of 2018. Remarkably, this increase is almost entirely driven by the increase in the number of assisted purchase transactions. According to Floyd Plettenberg, partner at Brookz and responsible for the Takeover Barometer, this is a logical consequence of the current market situation. "It is a seller's market: the number of businesses on offer is limited. For a well-run SME business, there are sometimes as many as twenty buyers lining up. Businesses looking to grow through acquisitions are therefore increasingly turning to an M&A adviser to help them find a suitable acquisition candidate and get their foot in the door more easily."
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