The Dutch SME takeover market has once again remained steady this year. The signs for 2025 are predominantly positive, with more interested buyers per company offered, more flexible financing due to falling interest rates and businesses entering the takeover market more quickly.
After three years of robust M&A growth (2020-2022), 2023 saw a brief pause. Besides the uncertainties in the world, it was mainly the ever-rising interest rates that affected the SME acquisition market since mid-2022. In 2023, Statistics Netherlands (CBS) recorded barely 4,800 mergers and acquisitions - the lowest level in the past six years.
Currently, after three quarters, the CBS counter for 2024 stands at "only" 4,210 transactions. This probably puts the total this year at around 5,500 mergers and acquisitions, a far cry from the record years of 2019 through 2022.
More privateers on the coast
It should be noted that CBS registers all mergers and acquisitions in the Netherlands; from the butcher on the corner to the publicly traded KPN. Looking at the market of businesses with revenues between 0.5 and 30 million euros, we see a two percent increase in the number of sales transactions in the first half of 2024 compared to the second half of 2023. So say the 289 Dutch merger and acquisition advisory firms participating in the Takeover Barometer, Brookz and Dealsuite s periodic survey of figures and trends in the Dutch takeover market.
After a sluggish first quarter, the Dutch takeover market got off to a good start, particularly in the second quarter of 2024. Stimulated by falling interest rates, this led on balance to an increase in the number of businesses sold. Notable in this respect was that more businesses with a smaller deal value (under five million euros) were sold in particular. The share of transactions by businesses with a deal value above five million euros fell from 42 to 35 percent.
Falling interest rates also make for smoother financing of an acquisition by buyers. After all, interest charges weigh less heavily on total financing, thereby increasing the business's ability to repay. And fundability is an important lubricant for deals to go through. Because buyer and seller can agree on all kinds of things, if the buying party doesn't get the financing, they are both empty-handed.
Not surprisingly - in the context of declining interest rates - there are on average more interested buyers lining up for a business today than a year ago. The Takeover Barometer shows that in 2023, there were about 5.9 potential buyers per business offered; by 2024, that number rose to 7 interested acquirers per business for sale.
Rising EBITDA multiple
So does that increased interest mean that sellers can ask a higher price for their businesses? On average, yes, although that will vary for every business and in every situation. On average, an SMB business was paid 4.8 times its gross profit (EBITDA) in the first six months of 2024, according to the Takeover Barometer. With that, the EBITDA multiple is rising two half-years in a row and is slowly creeping toward its highest level in four years.
A key driver for the Dutch takeover market in 2025 includes the category of inter- national buyers. After all, an SME business is relatively cheap in our country, with an average EBITDA multiple of 4.8. In fact, the Takeover Barometer shows that SMEs pay much more for businesses abroad. For example, the average EBITDA multiple in the United Kingdom is 5.1, in France 5.35 and in Germany, Austria and Switzerland (the Dach region) as high as 5.6. A strategic buyer looking to gain a foothold in the Netherlands or an entry into the Euro- pese market can still make a nice deal in our country.
Another driver of the Dutch takeover market in 2025 is investment companies. With investors - for years now - there is a lot of money on the shelf that needs to be put to work in order to pay off. And this is not only the case with Dutch investment companies. The interest of foreign investors in Dutch SMEs is also rising sharply.
At the end of 2023, there were 227 Dutch and foreign private equity firms active in the Netherlands, with a total of 3,656 holdings. Of these, less than half (1,638 participations) were in the Netherlands itself, M&A advisory firm Aeternus calculated in their report Private equity in the Netherlands 2024 halfway through this year. New players continue to enter the market, both from the Netherlands and abroad. The number of new private equity parties is growing less rapidly than in the past five years, but there is still growth. So the Netherlands remains an interesting country for investors to enter.
Moreover, there is plenty of money available from the funds. But according to the research report, the number of interesting businesses is not increasing in proportion; something that has been a concern among investors for years. Despite this scarcity of supply, investment companies remain critical in their investment decision, so there is increasing competition in the Dutch market. Most private equity parties focus on businesses with revenues between ten and one hundred million euros. EBITDA is preferably between two and ten million euros. Businesses that fall into these categories can count on a lot of interest from private equity. Here, the provision of growth financing, the possibility of a management buyout and the intended sale of the business are the preferred entry points.
Risks with seller
Brookz conducted its second survey this year on the terms and conditions included in purchase agreements of SME transactions. That survey was conducted among 243 acquisition lawyers, scrutinizing a total of 813 purchase agreements. These terms - also known as deal terms - covered the purchase price, conditions, warranties, indemnities, securities and non-compete clauses.
Main conclusion: compared to last year, conditions surrounding business acquisitions have partially eased. Selling entrepreneurs increasingly manage to keep a deferred payment (earn-out) or subordinated loan (vendor loan) out of the deal terms. Conversely, investors are mainly betting on additional guarantees, indemnities and a robust competition clause. In short, the seller gets a larger lump sum up-front, but the risk also falls on the seller in the deal structure.
'Entrepreneurs often get excited with a nice initial offer,' explains Brookz founder Peter Rikhof. 'But then a robust book examination follows, which usually leads to renegotiation. We see that experienced investors then try to place the maximum risk of the transaction on the selling party. That sometimes goes so far that as a seller you have to ask yourself whether it wouldn't be better to call off the deal.'
Outlook 2025
At Brookz, we see that the number of new businesses coming to the market is undiminished. Whereas in the 1990s an entrepreneur stayed with his company for about thirty years, the Takeover Barometer shows that anno 2024 a quarter of the businesses sold are younger than ten years old. That picture also emerges from the interviews we conducted with over 35 M&A professionals for the Brookz 500 in recent months.
In 2023, there were about 5.9 potential buyers per business offered; by 2024, that number has increased to 7 interested acquirers per business for sale
According to Dealsuite founder Floyd Plettenberg, these figures are confirmation of a trend that has long been identified at acquisition platforms Brookz and Dealsuite. 'The new generation of entrepreneurs is no longer buffeting through to possibly pass it on to the children later. If they can sell their business well after a few years they choose to do so. That's a sign of success.'
So entrepreneurs are entering the acquisition market with their businesses sooner, and this trend will only continue in the coming years. Add to that increased financeability, undiminished interest from potential buyers and hungry investment companies crowding each other out: then 2025 should be a good acquisition year.
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