M&A Quarterly - March 2019

March 29, 2019|Ann Hanna, Corey Vanderpoel

Market Summary

  • TEV/EBITDA in Q4 2018 increased to 7.8x from 7.3x in the prior quarter and averaged 7.2x for all of 2018, which is in line with the prior year of 7.3x.
  • The two industries showing the highest EBITDA multiples during 2018 were technology and media & telecom at 9.6x and 8.6x, respectively. EBITDA multiples for all manufacturing companies averaged 6.9x, which is 0.8x above historical averages.
  • On average, larger buyouts receive a premium to their EBITDA multiples. The spread on size premiums for larger deals between $50 and $250 million compared to deals between $10 and $50 million was 2.9x in 2018 YTD, which is above the average historic level of 2.3x.
  • Buyers continued to reward businesses with premiums for above-average financials (TTM revenue growth and EBITDA margins above 10% or one above 12% and the other 8%) during 2018. Buyouts for businesses with above-average financials averaged 7.9x vs. 7.2x for all others, a premium of 10%, which is in line with 2017.
  • Platform buyouts averaged a higher EBITDA multiple than add-ons during Q3 2018, 7.4x compared to 6.9x, respectively.
  • Debt utilization ticked up slightly in Q4 2018 with senior debt/EBITDA multiples across all industries at 2.9x compared to 2.7x the prior quarter; however, this is below the average during 2017 of 3.4x.
  • Average equity contributions increased to 48.6% in 2018; for reference, equity contributions had remained remarkably consistent in the 44-45% range over the prior three years.

What’s new at Taureau Group

  • December – Completed the sale of an industrial manufacturer to a company in the power industry.
  • January – Taureau Group announced ownership change and full independence as Ann Hanna & Corey Vanderpoel entered into an agreement to purchase the remaining shares held by Schenck SC.
  • January – Brock Childers promoted to Associate.
  • February – Completed the sale of an industrial coatings company to a private buyer.
  • February – Complete valuation assessment for a company in the coatings and adhesive industry.
  • February – Sponsored and presented to attendees at Manufacturing Matters! 2019 WMEP event.
  • March – Engaged by a company in the transportation industry for consideration of potential sale.
  • March – Engaged by an industrial machinery company for consideration of potential sale.

M&A activity remained robust in 2018 with North America and Europe recording its fifth consecutive year of total deal value exceeding $3 trillion. Transaction multiples though have begun to stabilize since the record highs achieved in mid-2017.

Active Broad Acquisition Searches

  • Add-on opportunities for buy-side clients in the plastics manufacturing and niche technology/automation industries.
  • Add-on opportunities for buy-side client looking for engineering or architectural service firms with revenues between $2 million - $15 million.

FEATURED ARTICLES

Market Statistics

Total Enterprise Value (TEV)/EBITDA*

TEV '03-13 '14 '15 '16 '17 YTD'18 Total
10-25 5.5 5.5 5.9 5.8 6.3 5.8 5.6
25-50 6.1 6.4 6.6 6.4 6.6 6.9 6.3
50-100 6.7 7.6 7.8 7.2 8.2 9.0 7.2
100-250 7.2 7.5 9.0 8.9 9.1 8.8 8.0
Total 6.1 6.4 6.7 6.7 7.3 7.2 6.4
 
 
 
 
 
 
 
 

TEV/EBITDA—By Industry Category*

Industry '03-13 '14 '15 '16 '17 YTD'18 Total
Manufacturing 5.9 6.1 6.6 6.1 6.8 6.9 6.1
Business services 6.1 6.1 6.4 7.3 7.5 7.2 6.4
Health care services 6.8 7.2 7.8 7.6 8.1 7.8 7.2
Retail 6.4 6.0 5.5 7.0 7.6 7.0 6.6
Distribution 6.0 7.2 6.7 7.5 7.7 7.1 6.5
Media & telecom 7.2 NA 6.4 6.6 8.2 8.6 7.2
Technology 6.6 7.7 8.0 7.4 10.2 9.6 7.7
Other 5.8 6.6 5.6 6.9 6.5 7.1 6.1
Senior Debt/EBITDA—Splits by Period*
TEV Q117 Q217 Q317 Q417
Q118 Q218 Q318 Q418
10-25 3.2 2.7 4.3 3.8 2.8 3.9 2.5 2.1 
25-50 2.7 3.2 2.7 2.9 3.1 2.8 2.5  2.5
50-100 2.9 4.5 3.0 3.8 4.0 3.2 2.6 3.5 
100-250 3.7 3.9 4.1 3.5 5.2 3.2 3.7 3.4 
Total 3.0 3.6 3.6 3.4 3.3 3.2 2.7 2.9 
*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.


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