BDO’s PCPI / PEPI* quarterly report shows that overall deal volumes rose by 2.6% in Q3, with 596 transactions. Trade deal volumes, which account for over 80% of market activity, have held firm in the quarter, with 488 deals completing in Q3 2019. Meanwhile, private equity activity has continued to accelerate in the year, rising from 90 deals in Q1, to 96 in Q2 and 108 in Q3. The rise represents an increase of 6.7% in Q2 and 12.5% in Q3.
The Private Company Price Index (PCPI) and Private Equity Price Index (PEPI), which track the multiples paid by trade and private equity buyers for private companies, underline the health of the current M&A market. The PEPI, which reflects private equity valuation multiples, saw a small fluctuation to 11.8x from a multiple of 12.2x in Q2, maintaining the steady profile seen throughout the last 18 months. Meanwhile trade valuations recorded a slight dip in the quarter, demonstrated by the PCPI decrease to 9.6.x in Q3 2019 (from 10.4x in Q2 2019).
Roger Buckley, M&A Partner at BDO, commented: “There has been a reduction in mega-deals this year which has grabbed the headlines, but there is actually a huge amount of deal making going on and the mid-market continues to see high levels of deal activity. Despite geopolitical headwinds, we see a robust M&A mid-market as organisations and entrepreneurs ‘get on with it’ - doing what they need to do to build great businesses.”
*Private Company Pricing Index / Private Equity Pricing Index
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