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Transaction volumes slump in Q2

28 July 2020

Lockdown of the markets had a significant impact on M&A deal volumes in Q2 2020, which slumped 57% with just 250 deals, down from 582 in the last quarter. Trade deal volumes fell by 58% to 214 deals. Volumes in the Private Equity market dropped by 53% to 36 PE deals.

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.

ENDS

*Private Company Pricing Index / Private Equity Pricing Index

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Contacts

Roger Buckley
M&A Partner BDO
+44(0)121 352 6213
[email protected]

BDO press office:
020 7893 3000
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