M&A Quarterly Newsletter - December 2023

December 22, 2023|Taureau

Market Summary

  • Valuations on deals completed in 3Q 2023 averaged 7.5x TTM adjusted EBITDA, an increase of 0.9x compared to 2Q 2023 valuations.
  • The two industries showing the highest EBITDA multiples through 3Q 2023 were health care services at 9.4x and technology at 8.4x. EBITDA multiples for all manufacturing companies averaged 6.7x through 3Q 2023, compared to the 7.3x average for 2022.
  • Average 3Q purchase price multiples increased across all size tiers over 2Q, apart from the $25 million to $50 million tier, which was only off by a tenth of a turn of EBITDA. Transactions valued above $50 million recorded increases in average purchase price between nearly a full multiple and 2.5x.
  • Add-ons accounted for 48% of transactions completed through 3Q 2023, well above the 34% average for 2022. The average purchase price for add-ons remained a turn less than platform investments at 6.6x versus 7.6x, respectively.
  • Buyout transactions averaged 7.3x through 3Q 2023, compared to 7.4x for 2022.
  • Senior debt pricing continued to increase in the third quarter, with average senior debt reaching 10.5%, compared to 9.5% in 2Q 2023.
  • Although deal flow continued to lag in 3Q 2023, average purchase price multiples rebounded from 2Q 2023, increasing nearly a full turn and in line with 2022.

What’s New at Taureau Group

  • September – Nick Mydlach, Vice President & Shareholder, attended the FABTECH Expo, North America's largest metal forming, fabrication, welding and finish event, broadening our in-depth knowledge and market insights in the metal fabrication and equipment manufacturing industry.
  • September – Engaged by injection molding and manufacturing company for potential sale.
  • September – Taureau Group was honored as a top M&A advisor in the 2023 Axial Advisor 100.
  • September – Engaged by optics accessories product line manufacturer for potential sale.
  • October – Michael Schroeder, Director & Shareholder, shared debt insights for 4Q 2023 in Taureau Group's blog.
  • October – Taureau Group participated as a proud sponsor at the BizStarts Community Market Opening Celebration. 
  • November – Engaged by precision metals manufacturing company focused on A&D and medical end markets for potential sale. 
  • December – Zach Zarr joined Taureau Group as an Analyst. Learn about Zach here.
  • December – Taureau Group published its 2023 Volume II Packaging & Printing Industry Report. Download the report here.
  • December Andrew Sannes, Managing Director & Shareholder, provides a look ahead at M&A in 2024 in Taureau Group's blog.
  • December – Taureau Group published its 2023 Volume II Industrial & Contract Manufacturing Industry Report. Download the report here.

While deal flow continued to lag in the third quarter, average purchase price multiples rebounded from the second quarter to match the first quarter and come in line with all of 2022. The increase in purchase price shows that there are still high-quality and strategic opportunities in the M&A market.

Active Broad Acquisition Searches

  • ESOP client looking to make acquisitions of highly engineered industrial equipment manufacturers with revenues between $10 million - $30 million.
  • Acquisition opportunities for a private equity client looking for residential garage door services companies with revenues greater than $1 million.
  • Acquisition opportunities for a private equity platform company looking for residential exterior repair & restoration companies in Southeast U.S. with revenues greater than $5 million.
  • Acquisition opportunities for a holding company looking for established electrical contractor companies in Southeast Wisconsin with revenues between $10 million - $25 million.
  • ESOP client looking to make acquisitions of educational services, and CTE products and software companies with revenues between $5 million - $20 million.
  • Acquisition opportunities for a private equity platform company looking for diverse metal fabrication companies in the Midwest with revenues between $10 million - $50 million.

Featured Insights

  • Debt Market Insights | Q4 2023 - Read the article here.
  • Looking Ahead at M&A in 2024 - Read the article here.

Market Statistics

Total Enterprise Value (TEV)/EBITDA*

TEV '03-18 '19 '20 '21 '22 YTD'23 Total
10-25 5.8 6.1 5.9 6.1 6.5 5.8 5.9
25-50 6.5 7.0 6.7 7.2 7.0 7.1 6.7
50-100 7.5 7.5 8.0 8.3 8.5 8.2 7.7
100-250 8.1 9.2 8.7 9.3 9.1 9.7 8.5
Total 6.6 7.1 7.0 7.6 7.6 7.3 6.8

TEV/EBITDA—By Industry Category*

Industry '03-18 '19 '20 '21 '22 YTD'23 Total
Manufacturing  6.2 6.5 6.7 7.1 7.3 6.7 6.4
Business services 6.6 7.2 7.1 7.3 7.4 7.1 6.9
Health care services 7.4 8.0 7.6 8.1 8.4 9.4 7.6
Retail 6.9 9.3 6.5 8.3 8.0 6.0 7.1
Distribution 6.5 7.0 7.5 7.2 7.2 7.1 6.8
Media & Telecom 7.4 9.4 8.3 7.0 9.1 NA 7.6
Technology 8.3 10.0 7.6 10.3 8.1 8.4 8.6
Other 6.3 6.5 6.2 7.3 6.7 7.2 6.4

Senior Debt/EBITDA—Splits by Period (platforms only)

TEV Q421 Q122 Q222 Q322
Q422 Q123 Q223 Q323
10-25 2.0 1.8 1.8 2.1 1.7 1.9 1.7 1.1
25-50 2.3 2.5 2.2 2.4 2.3 2.2 1.5 2.9
50-100 2.9 3.1 3.6 2.7 2.6 2.3 2.2 2.5
100-250 3.5 2.9 3.6 4.0 3.0 3.1 3.3 3.8
Total 2.6 2.6 2.7 2.7 2.3 2.3 2.2   2.7
*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.


View the PDF version of M&A Quarterly.