M&A Quarterly - December 2016

December 8, 2016|Ann Hanna, Corey Vanderpoel

Market summary

  • Valuations in Q3 and YTD 2016 both averaged 7.0x TTM Adjusted EBITDA based on 30 and 148 completed deals respectively, up from 6.7x in both 2014 and 2015 and above the historical average of 6.3x.
  • Transaction debt levels during Q3 2016 were 4.0x, down slightly from 4.1x in Q2, but still above the historical level of 3.6x.
  • The spread on size premiums for larger-sized deals between $50 million and $250 million compared to deals from $10 million to 50 million was 2.3x over the first nine months of 2016, marginally higher than the spread of 2.1x in 2015 and above the historic level of 1.7x.
  • Buyers continue 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%) through September 2016. Multiples of premium companies averaged 7.2x vs. 6.3x for all others, a 14% premium and double the historical spread of 7%.
  • Through the first three quarters of 2016, platforms have moved to the premium position with valuations of 7.1x vs 6.2x for portfolio add-ons.
  • Senior Debt/EBITDA multiples across all industries through September 2016 were 3.2x, up from 2.7x in 2015, and up from a historical average of 2.5x.

What’s new at Schenck M&A Solutions

  • November – Engaged by a material handling products company regarding a potential sale or recapitalization
  • October – Completed sale of Fox River Dock and Upper Lakes Coal Company to Fox River Terminals, LLC
  • September – Completed sale of Dominion Title to Title Midwest, Inc.
  • September – Engaged by a health services provider to provide valuation guidance
  • September – Working with direct marketing solutions company on potential sale to strategic buyer
  • September – Facilitating acquisition of a metal fabrication business by a private investor group
  • September – Completed recapitalization of Color Craft Graphic Arts to First Capital Partners

Read the full issue of Schenck M&A Quarterly→ 

Securities offered through Burch & Company, Inc., member FINRA / SiPC. Burch & Company and Schenck M&A Solutions are not affiliated entities. Ann Hanna and Corey Vanderpoel of Schenck M&A Solutions are registered investment banking representatives with Burch & Company.