BDO’s PCPI / PEPI* quarterly report shows that trade multiples were maintained at 10.1x while PE multiples contracted to 10.3x. Meanwhile, the FTSE all share rebounded to 11.8x. While deal volumes saw a significant reduction, businesses that were still transacting saw values holding firm on the whole.
Roger Buckley, M&A Partner at BDO, commented: “Deals completing in Q2 achieved multiples that were broadly in line with terms agreed pre-lockdown. However, we expect to see a mixed picture going forwards. Some hard-hit sectors are likely to be absent from the M&A arena, while earn-out structures will become increasingly important to get deals over the line.
“Businesses which continue to transact are likely to be those in resilient sectors, which in turn should continue to attract decent multiples. Given these dynamics, it is of course possible that valuations could even increase in some resilient sectors such as tech, pharma and food & drink as the money chases safe havens, and competition increases for a smaller population of businesses.
*Private Company Pricing Index / Private Equity Pricing Index
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