More transactions, a larger order book and a positive outlook for the rest of 2015. These are the main findings of the Brookz Takeover Barometer, the periodic survey by takeover platform Brookz, on figures and trends in the takeover market.
The survey was conducted among 122 merger & acquisition advisory firms (460 advisers) representing more than 75g percent of the SME acquisition market (businesses with revenues between 0.5 to 25 million euros). Of these, over 35% of the firms participated in the survey this time.
More deals and assignments
In the first quarter of 2015, respondents supervised 128 buy transactions and 136 sell transactions. More than half of these transactions took place in the industries of Business Services (20%), Wholesale and Retail (17%) and Industry and Manufacturing (16%).
In addition, the pipeline was well filled in the first quarter. Compared to the previous quarter (Q4-2014), 60% of advisory firms saw a significant increase in the number of assignments. In fact, 19% of the advisory firms experienced an increase in the number of assignments of more than 25%. Only 5% of acquisition consulting firms saw a decrease in the number of assignments in Q1-2015 compared to Q4-2014.
Slightly rising prices
Disclosing transaction prices is sensitive in the SME sector. In order to have an indication of the price development, we asked the acquisition advisory firms for their insights on the level and changes of the multiples, the factor by which the EBITDA of a business is multiplied to arrive at the transaction price. The average applied multiple across all industries is 4.6. The average multiple used by industry ranges between 3.7 and 5.7. A large majority of advisory firms (58%) indicated that the multiples paid in Q1-2015 were similar to a year earlier (Q1-2014).
Outlook
The outlook for the acquisition market for the remainder of 2015 is positive. Over three-quarters of acquisition advisory firms (77%) expect the acquisition market to continue to pick up over the next six months. About a quarter of advisers expect the acquisition market to remain unchanged over the next 6 months. None of the respondents expect the acquisition market to deteriorate over the next 6 months. Expressed as a report grade, acquisition advisory firms give the acquisition climate in the first quarter of 2015 an average of 6.4. For the expected acquisition climate in the next 6 months, respondents give an average report grade of 7.3.
EBITDA Multiples by Industry — Q1 2015
| Industry |
EBITDA-multiple |
| Healthcare & Pharmacy |
5,7 |
| ICT & Internet |
5,5 |
| Agri & Food |
5,3 |
| Industry & Manufacturing |
4,8 |
| Media, Advertising & Communications |
4,7 |
| Business services |
4,7 |
| Wholesale & Retail |
4,3 |
| Hospitality, Tourism & Recreation |
3,9 |
| Construction & Installation Engineering |
3,7 |
| Automotive, Transportation & Logistics |
3,7 |
| Average |
4,6 |
Survey date: end of Q1 2015. Source: Brookz Takeover Barometer Q1 2015.
Summary
- The average EBITDA multiple used for Dutch SMEs in Q1 2015 was 4.6, with a range of 3.7 to 5.7 by industry.
- In Q1 2015, the participating M&A advisory firms completed 128 acquisition transactions and 136 divestiture transactions.
- 60% of M&A advisory firms saw the number of engagements increase by more than 10% in Q1 2015 compared to Q4 2014; for 19% of these firms, the increase was as high as 25% or more.
- Only 5% of M&A advisory firms saw a decline in the number of engagements in Q1 2015—not a single firm reported a sharp decline.
- 58% of advisory firms reported that the multiples paid in Q1 2015 were comparable to those a year earlier (Q1 2014); 35% saw a slight increase.
- Business services accounted for 20% of the total number of transactions, making it the largest sector, followed by Wholesale & Retail (17%) and Industry & Manufacturing (16%).
- More than 70% of acquisition financing was secured through a combination of equity (30%) and bank loans (approximately 40%, including government guarantees).
- 77% of M&A advisory firms expected the M&A market to pick up further in Q2 and Q3 2015; the rating rose from 6.4 (Q1) to an expected 7.3.
