Acquisition Multiples Trend Down

— Sat, August 08, 2009

I received this in an email from Rich Goeldner of FairValue Advisors. My take on the reduced multiples paid for the smaller mid-market companies is that sales/ebitda trended down for many of them in 2008/2009 and financing dried up. I expect a reversal of this chart in 4th quarter 2009. enjoy. Chris

Acquisition Multiples

Acq Mult Chart

  • Median acquisition multiples fell 15-44% across the 3 size categories in the most recent quarter; multiples of mid-size acquisitions dropped the most – nearly 44%.
  • EBITDA multiples have dropped approximately 40-50% since 2007/2008 highs.
  • Deal volume rose approximately 6% in most recent quarter but is down approximately 30% from July 2008 peak.
  • Multiples include acquisitions in past 3 years with positive EBITDA.
  • Excludes acquisitions of banks and real estate companies.
We hope that you find this update informative.  Certainly, we would be pleased to assist you with your valuation needs. Sincerely,
Rich Goeldner ASA, CBA
FairValue Advisors, LLC
888.212.0495 ext. 103
rich@fairvalueadvisors.com

One Response to Acquisition Multiples Trend Down

  1. Jay Knoblett says:
    August 24, 2009 at 5:39 pm

    We are seeing a devaluation of approximately 20% of values seen in late 2007. Banks are beginning to loan on small business acquisitions again. The lending process is much more cumbersome and lengthy. Great website Chris!

    Reply

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