New Capstone Partners Middle Market M&A Valuations Index Show Strong Purchase Multiples Across Major Middle Market Industries

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Apr 18, 2022, 15:28 ET

BOSTON, April 18, 2022 /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, today released its first annual Middle Market M&A Valuations Index, examining EBITDA and revenue purchase multiples for middle market businesses across 10 industries. The report leverages market research and Capstone's proprietary data to provide business owners and market participants greater transparency into the pricing dynamics of middle market merger and acquisition (M&A) sale processes.

Capstone Partners Middle Market M&A Valuations Index

According to the report, middle market M&A activity soared to record heights in 2021 in a year characterized by feverish buyer appetite, expedited deal timelines, and seller-friendly valuations. Despite supply chain challenges, continuous COVID-19 variant disruptions, and rising inflation, a wealth of transactions flooded the private market – oftentimes overwhelming the capacity and bandwidth of dealmakers and third-party M&A service providers.

Anecdotally, market participants throughout 2021 shared that valuations had far surpassed prior year levels, owing to a return of buyers to the table and sellers that had recouped substantial COVID-induced losses. In analyzing our Middle Market M&A Valuations Index, the middle market appears to be much more resilient than the broader M&A market. The average EBITDA multiple amounted to a healthy 10.7x in 2021, mirroring 2020, albeit on significantly higher deal volume. A possible explanation for this pricing dynamic is that many businesses severely impacted by COVID-19 abandoned sale processes in 2020, unwilling to transact at less than fair value. This drove a flight to quality, buoying the average middle market transaction multiple – a trend that continued into 2021. In addition, an abundance of smaller transactions closing at lower purchase multiples placed downward pressure on the overall average valuation.

Dealmakers remain confident in valuations and transaction volume for privately held middle market companies in 2022. Inflationary headwinds, supply chain disruptions, and COVID-19 variants will continue to serve as impediments to economic growth, however founders and entrepreneurs have demonstrated their ability to adapt amid heightened uncertainty. Buyers will continue to compete for quality assets as business owners increasingly explore liquidity options – creating a favorable backdrop for healthy pricing and activity in the middle market.

Also included in this report:

Capstone's outlook for middle market deal activity and valuations in 2022
Detailed analysis of middle M&A purchase multiples across 10 industries
Commentary on industry specific middle market M&A volume and buyer breakdown

To access to full report use this link: https://www.capstonepartners.com/insights/report-capstone-partners-middle-market-mergers-and-acquisitions-valuations-index/

ABOUT CAPSTONE PARTNERS

Capstone Partners is one of the largest independently owned investment banking firms in the United States. For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of expert investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle. Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services. Headquartered in Boston, the firm has 175+ professionals across the U.S. and an international presence including over 450 professionals in 40 countries. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams on a global basis. For more information, visit www.capstonepartners.com.

For More Information Contact:

Rebecca Levesque
Director of Marketing
617-619-3318
[email protected]

SOURCE Capstone Partners