M&A Quarterly - September 2018

September 20, 2018|Ann Hanna, Corey Vanderpoel

Market Summary

  • Q2 2018 averaged 7.4x TEV/EBITDA, an increase from 6.8x during Q1 2018, but in line with multiples attained in mid-2017.
  • The two industries showing the highest EBITDA multiples during Q2 2018 were were technology and retail at 9.4x and 8.1x, respectively. EBITDA multiples for all manufacturing companies averaged 6.7x, which is 0.6x above historical averages.
  • The spread on size premiums for larger-sized deals between $50 million and $250 million compared to deals between $10 million to $50 million was 3.4x YTD through Q2 2018, which is above the average historical level of 2.2x.
  • Platform buyouts averaged a higher EBITDA multiple than add-ons during Q2 2018, which was 7.2x compared to 6.9x, respectively.
  • Buyers continued to reward businesses having above-average financials (TTM revenue growth and EBITDA margins above 10%, or one above 12% and the other 8%) during Q2 2018. These businesses averaged 7.7x versus 6.1x for all others, which is a premium of 26% and in line with 2017.
  • Senior debt/EBITDA multiples across all industries remained at the elevated levels established earlier in 2017 and were 3.3x through the first half of 2018.
  • Average equity contributions were 44.1% through Q2 2018, a slight decline from 44.6% in 2017.

What’s new at Taureau group

  • June – Engaged by an industrial manufacturer on potential sale
  • June – Engaged by a buy-side client to consider acquisition of a machine shop
  • July – Continue to seek add-on acquisition opportunities for buy-side clients in the plastics manufacturing and niche technology industries
  • August – Completed the sale of a utility contractor to a substation services and equipment company
  • August – Completed valuation assessment for a company in the machining equipment industry
  • August – Engaged by a casting manufacturer, a home furnishing products manufacturer, and a specialty building products company to advise on consideration of potential sale
  • August – Engaged by a wealth advisory firm to pursue acquisition opportunities
  • August – Presented to State Bar of Wisconsin on Attorney Expertise in the M&A Process: An Investment Banking Perspective
  • August – Completed sale of industrial coating company to private equity group
  • August – Completed acquisition of CNR Group, LLC by Nicolet Plastics LLC, a subsidiary of TruVenture Composites LLC
Register at taureaugroup.com/events for our annual M&A Forum: Fact or fiction, taking the mystery out of M&A, to be held on October 16 at the Bridgewood Resort Hotel & Conference Center in Neenah.

Market Statistics

Total Enterprise Value (TEV)/EBITDA*

TEV '03-13 '14 '15 '16 '17 YTD'18 Total
10-25 5.5 5.5 5.8 5.8 6.4 5.9 5.6
25-50 6.1 6.4 6.6 6.4 6.6 6.6 6.3
50-100 6.7 7.6 7.8 7.3 8.2 9.1 7.1
100-250 7.2 7.5 9.0 8.9 9.2 8.5 7.9
Total 6.1 6.4 6.7 6.8 7.3 7.0 6.3

TEV/EBITDA—By Industry Category*

Industry '03-13 '14 '15 '16 '17 YTD'18 Total
Manufacturing 5.9 6.1 6.6 6.1 6.9 6.7 6.1
Business services 6.1 6.1 6.3 7.3 7.5 6.9 6.4
Health care services 6.8 7.2 7.8 7.6 8.1 7.6 7.1
Retail 6.4 6.0 5.5 7.1 7.6 8.1 6.6
Distribution 6.0 7.2 6.7 7.5 7.8 7.6 6.4
Media & telecom 7.2 NA 6.4 6.7 8.2 5.0 7.1
Technology 6.6 7.7 8.0 7.4 10.2 9.4 7.6
Other 5.8 6.6 5.6 7.0 6.5 6.2 6.0

Senior Debt/EBITDA—Splits by Period*

TEV Q316 Q416 Q117 Q217 Q317
Q417 Q118 Q218
10-25 2.7 3.1 3.3 2.7 4.5 4.0 2.8 3.9
25-50 2.9 2.3 2.8 3.2 2.7 2.9 3.3 2.7
50-100 2.8 3.0 2.9 4.6 3.0 3.8 4.0 3.2
100-250 4.4 3.5 3.7 3.9 4.1 3.5 5.2 3.2
Total 3.2 2.9 3.0 3.6 3.7 3.5 3.4 3.2

*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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