Valuations on deals completed in the first quarter of 2023 averaged 8.0x Trailing Twelve Months (TTM) adjusted EBITDA, rebounding from the 6.9x average recorded in 4Q 2022 and in line with the 8.2x average set in the third quarter.
In Q1 2023, M&A transaction multiples experienced a rebound, indicating increased valuation levels compared to the previous quarter. This rebound despite increasing price of debt demonstrates a positive sign for sellers.
For transactions between $10M-$50M, multiples have already been trending above their 20-year average. The aggressive start to valuations in 2023, significantly above the averages for 2022, suggests increased pricing and potential confidence in the lower middle market.
The rebound in valuation is not seen across all sectors; as those industries which are less impacted by inflationary pressures are the ones seeing increases in multiples.
We will see what the rest of year brings!
GF Data collects and publishes proprietary business valuation, volume, leverage and key deal term data on private equity sponsored merger and acquisition transactions with enterprise values of $10 to 500 million. GF Data gives M&A deal participants and advisors more reliable external information to use in valuing companies and negotiating transactions.
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