Middle-Market M&A Recap

While Activity Spiked in 2014, 2015 Numbers Were Still Strong

In a recent Forbes article, Contributor Todd Ganos recaps 2015 middle-market M&A activity and compares the data to historical figures. While year-over-year middle-market activity dropped 20% from 2014, 2015 was actually still in line with other recent years.

When taking a closer look, Ganos cites granular data from SDR Ventures on price multiples that indicate that “overall middle-market M&A activity in 2015 saw an average price multiple of roughly 14.51 times EBITDA, with companies in the $51 million to $100 million value range trading at the highest average multiple, 17.33 times.” However, multiples did decrease quickly as values went up.

While mega-deals and larger middle-market deals gained headlines in 2015, the article again cites SDR’s findings that show that companies with values below $100 million actually made up 87% of all middle-market deal volume and 56% of middle-market transaction value. This competitive seller’s market likely helped push multiples to their high levels. Ganos points out a key takeaway: the transaction multiple that a company may achieve via M&A can’t just be determined based on industry averages; the revenue range of the firm must be factored in as well.

In all, Ganos summarizes middle-market M&A activity in 2015 as “pretty good.” When looking to 2016, he wonders what another hike in interest rates may mean for the deal environment.

Click here to read the full article on Forbes.com.

Forbes