M&A Quarterly – March 2017

March 16, 2017|Ann Hanna, Corey Vanderpoel

Market Summary

  • Valuations in Q4 and overall for the full year in 2016 both averaged 6.9x
    TTM Adjusted EBITDA based on 52 and 209 reported deals respectively,
    higher than any other year dating back to 2003.
  • The spread on size premiums for larger deals between $50 million
    and $250 million compared to deals between $10 million and $50
    million was 2.2x in 2016, marginally higher than the spread of 2.1 in
    2015 and above the historical level of 1.6x.
  • Buyers continued to reward business with premiums for above-average
    financials (TTM revenue growth and EBITDA margins above 10%, or one
    above 12% and the other 8%) in 2016. Quality companies averaged
    7.3x vs. 6.1x for all others, a 19% premium, and almost triple the historical
    average of 7.0% on transactions since 2003.
  • Through the first three quarters of 2016, platforms have moved to the
    premium position with valuations of 7.0x vs 6.3x for portfolio add-ons.
  • Transaction debt levels during Q4 2016 were 3.6x, down slightly from
    3.8x in Q3. Overall transaction debt levels during 2016 were 3.9x, level
    with 2015 and above the average since 2003 of 3.6x.
  • Senior Debt/EBITDA multiples across all industries in 2016 were 3.1x,
    up modestly from 3.0x in 2015 and up from a historical average of 2.6x.

What’s New at Schenck M&A Solutions

  • February – Completed acquisition of Nicolet Plastics, Inc. by
    TruVenture Composities LLC, a plastics portfolio of North Cliff Corp.\
  • February – Engaged by direct marketing solutions company on
    potential sale
  • February – Initiated effort with Schenck’s BizOps & HR consulting
    groups to create a formula for driving company value prior to a
    potential transaction for firms that might benefit from improved
    cost efficiencies or filling management team gaps
  • January – Advised on valuation of mechanical contractor
  • January – Commenced an acquisition search for a privately held
    company looking to diversify
  • December – Advised on valuation of health solutions provider

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.