Premium on EV/EBITDA Increased to 40% for Top Deals With Blended Costs of Capital Decreasing
NEW YORK, Dec. 11, 2019 /PRNewswire/ -- CEPRES releases its latest Private Capital Market Outlook report showing that US buyout fundraising activity increased in Q3-2019 by more than 20% and now is at its highest volume since before the buyout bubble burst more than 10 years ago.
In contrast, the European buyout fundraising remains robust in absolute volume terms and represents a double-digit increase YoY and only a slight QoQ decrease, underscoring the strong buyout fundraising activity in Q3-2019.
In terms of deal entry pricing multiples in North America as measured by EV to EBITDA, the median is steadily increasing from a low of 6.6x in 2009 to a frothy 10.4x in 2018 which far exceeds the pre-buyout bubble burst peak of 8.8x in 2007.
In fact, even the 8x lower quartile in 2018 is slowly encroaching on the 2007 median. The trend in the top quartile is even more alarming with pricing multiples beyond 12x for the past five years – a level that the market has never reached before in the past fourteen years – and the spread with median is widening. However, many underlying businesses that are valued at those high levels show record-high revenue growth numbers according to aggregated numbers of 76,000 portfolio companies that are tracked on the CEPRES platform.
The full report is available to CEPRES members from: https://www.cepres.com/latest-intelligence
Commentary:
"In most cases our CEPRES analytics platform shows that digital business transformation drives the top companies in the market to these extraordinary growth levels that we see, decoupling from the rest of the market in a very positive way and therefore valued with the highest entry multiples ever measured."
Dr. Daniel Schmidt, CEO & Founder, CEPRES.
About CEPRES
CEPRES is the leading digital platform for investment analytics & data solutions for private capital markets. CEPRES began in 2001 as the Center of Private Equity Research and was the first to 'look-through' private market funds to underlying deal and asset performance. Today, our award winning online platform securely connects thousands of professionals in the largest private investment network in the world. CEPRES combines the most secure digital data exchange with sophisticated SaaS solutions and expert analysis frameworks to empower LPs, GPs and related professionals. Through CEPRES decision makers can secure their investment data to gain true insights on their portfolio of funds down to single operating assets within a confidential yet fully flexible framework.
The CEPRES platform includes a network connecting buy- & sell-side market participants. Institutional Investors (LPs), Fund Managers (GPs), Advisors, Administrators, Fund of Funds and other investment professionals interact on one platform: GPs confidentially benchmark their track record, attract fitting capital sources and demonstrate their alpha to investors. LPs forecast their portfolio outcomes, optimize asset allocations and enhance due diligence.
To date over 2,500 GPs & LPs have securely exchanged investment data of over 7,500 funds and 76,000 deals worth over $27.26Tr. in Enterprise Value.
For further information visit www.cepres.com.
For more information about this release or to schedule an interview:
Contact: Birgit Wiggert
Tel: +49 (0) 89 232 495 628
Email: [email protected]
SOURCE CEPRES
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