EBITDA multiples declined in Q3 2024
December 5, 2024
More analysis on what might happen in 2025 next week!
As you know we capture data from many sources to ensure that we provide the most accurate valuations possible.
One of these sources is Business Valuation Resources in the US. At the end of November it told us:
EBITDA multiples declined in Q3 2024
As it reported; “In the time period analyzed, average multiples across all industries were highest in the fourth quarter of 2018, at 4.5x, and trended downward from that high point until the first and second quarters of 2022, when they reached 2.9x. Since then, average multiples have generally been trending upward, reaching a peak of 4.8x in the second quarter of 2024, before dropping to 3.2x in the third quarter of 2024….”
All-time EBITDA multiples remain the highest for the information sector (10.9x) and the utilities sector (8.2x). Meanwhile, the lowest all-time EBITDA multiples are in the accommodation and food services (2.5x) and the other services sectors (3.1x). The median across all industry sectors for all periods is 4.0x. The information sector has shown a notable recent increase, with the last 12-month EBITDA multiple rising to 28.7x compared to its all-time period multiple of 10.9x.”
This table shows very clearly why VCs love software and FinTech! Remember that this is a chart of median results and there may be a large variance between the high and low equivalents.
Lastly, this helpful chart helps to illustrate why public market transactions have an implicit premium. Perhaps this message needs to be made more clearly to owners of businesses large enough to list.
We are increasingly being asked by clients to provide non-legal corporate advisory (what I might call common sense advice!) following a valuation exercise.
We take this as a great compliment as it means that our valuation reports have already helped the client to the point that they feel we are the right people to provide additional advice. It is enjoyable work and the team has the skills to perform the tasks required, supported by a number of very experienced corporate financiers in the background. I thought I would mention it just in case you have any clients who need a pragmatic solution to the challenge of getting ‘City of London’ quality advice quickly and on competitive terms.
In the meantime, we are now typically completing up to five valuation reports a week as we have the capacity to do so. Please get in touch if you or your clients need some valuation assistance. We will respond quickly and can provide a valuation to meet even a tight timescale.
