M&A Newsletter – March 2022
by Taureau Group
Market Summary
- TEV/EBITDA in Q4 2021 averaged 7.5x, matching the elevated mark in the previous quarter.
- While valuations held steady, average debt utilization edged up two-tenths of a turn. Average senior and total debt were 3.3x and 4.2x in the quarter, up from 3.1x and 4.0x, respectively. This is continued evidence of the volume of debt capital as well as equity available to support private-equity backed transactions.
- The two industries showing the highest EBITDA multiples through Q4 2021 were technology and health care services at 9.4x and 8.0x, respectively. EBITDA multiples for all manufacturing companies averaged 7.1x, which is above historical averages.
- Add-ons accounted for an increased share of the buyouts subset over the last three years, peaking at about 30% of the sample in 2020. In 2021, the add-ons share receded to a more conventional 27%.
- Platform buyouts averaged slightly higher EBITDA multiples than add-ons through Q4 2021, 7.4x compared to 7.1x, respectively, which is in line with historical averages.
What’s New at Taureau Group
- January – Ron Burgers joined Taureau Group as an Analyst.
- January – Completed the sale of R&B Grinding Co., Inc. to an affiliate of Willis & Smith Capital.
- January – Engaged by ESOP holding company looking for acquisitions of industrial equipment manufacturers.
- January – Taureau Group is named a 2022 Best and Brightest Company to Work For in Milwaukee by the National Association for Business Resources (NABR).
- January – Engaged by contract manufacturer for consideration of potential sale.
- February – Ann Hanna is quoted in BizTimes Milwaukee magazine’s article titled, “Breaking with tradition: What happens when the next generation doesn’t want the family business?” Read the article here.
- February – Engaged by metal fabrication company for consideration of potential sale.
- February – Ann Hanna is named one of the 2022 Most Influential Women in Mid-Market M&A.
- February – Engaged by automation solutions company for consideration of potential sale.
- March – Taureau Group published its 2022 Volume 1 Packaging & Printing Industry Report. Download the report here.
- March – Ciara Jones joined Taureau Group as an Analyst.
- March – Engaged by industrial capital products company for consideration of potential sale.
- March – Jon Moreau joined Taureau Group as a Senior Operating Partner covering the North Region, including Green Bay, Fox Valley and other northern cities in Wisconsin.
Middle-market M&A kept its pace as 2021 drew to a close. However, the future remains unpredictable as we experience easing of the COVID pandemic, shifting geopolitical influences, inevitable interest rate hikes and anticipated changes to tax rates. Despite these stresses, companies are maintaining M&A as a major strategy to protect their position in the market, increase gains and accelerate transformative progress.
Active Broad Acquisition Searches
- ESOP client looking to establish new platforms in a broad variety of niche manufacturing and business service industries with EBITDA of $2 million or more and total enterprise values greater than $10 million.
- ESOP client looking to make acquisitions of highly engineered industrial product manufacturing or engineering companies with less than $20 million of revenue.
- Acquisition or partnership opportunities for buy-side client looking for automobile technology and power access companies with revenues less than $100 million.
- ESOP client looking to make acquisitions of metal fabricators with manufacturing facilities in Southeast U.S. with revenues between $5 million – $50 million.
- Acquisition opportunities for buy-side client looking for steel erectors focused on Southeast U.S. market with revenues less than $40 million.
- ESOP client looking to make acquisitions of highly engineered industrial equipment manufacturers with revenues between $10 million – $30 million.
Featured Articles
- 2021 Year in Review | 2022 M&A Outlook – Read the article here.
- Breaking with tradition: What happens when the next generation doesn’t want the family business? – Read the article here.
Market Statistics
Total Enterprise Value (TEV)/EBITDA*
| TEV | ’03-16 | ’17 | ’18 | ’19 | ’20 | ’21 | Total |
|---|---|---|---|---|---|---|---|
| 10-25 | 5.6 | 6.3 | 5.9 | 6.1 | 5.9 | 6.2 | 5.7 |
| 25-50 | 6.2 | 6.6 | 6.9 | 6.9 | 6.8 | 7.0 | 6.5 |
| 50-100 | 6.9 | 8.2 | 8.8 | 7.5 | 8.0 | 8.3 | 7.4 |
| 100-250 | 7.7 | 9.0 | 8.7 | 9.3 | 8.6 | 9.0 | 8.3 |
| Total | 6.2 | 7.2 | 7.2 | 7.0 | 7.0 | 7.3 | 6.6 |
TEV/EBITDA—By Industry Category*
| Industry | ’03-16 | ’17 | ’18 | ’19 | ’20 | ’21 | Total |
|---|---|---|---|---|---|---|---|
| Manufacturing | 6.0 | 6.8 | 6.9 | 6.5 | 6.7 | 7.1 | 6.3 |
| Business services | 6.2 | 7.3 | 7.1 | 7.1 | 7.0 | 7.3 | 6.7 |
| Health care services | 7.0 | 8.1 | 7.8 | 8.4 | 7.8 | 8.0 | 7.4 |
| Retail | 6.4 | 7.3 | 7.5 | 9.3 | 6.9 | 7.7 | 6.8 |
| Distribution | 6.3 | 7.6 | 6.9 | 7.0 | 7.5 | 7.3 | 6.7 |
| Media & Telecom | 7.0 | 7.7 | 7.8 | 7.0 | 8.3 | 6.3 | 7.2 |
| Technology | 7.1 | 9.9 | 9.6 | 10.0 | 7.6 | 9.4 | 8.0 |
| Other | 5.9 | 6.5 | 7.0 | 6.5 | 6.2 | 6.5 | 6.1 |
Senior Debt/EBITDA—Splits by Period*
| TEV | Q120 | Q220 | Q320 | Q420 | Q121 | Q221 | Q321 | Q421 |
|---|---|---|---|---|---|---|---|---|
| 10-25 | 2.9 | 4.0 | 2.7 | 3.0 | 4.3 | 2.9 | 2.3 | 3.8 |
| 25-50 | 3.0 | 2.2 | 2.6 | 2.9 | 3.3 | 2.5 | 3.5 | 2.9 |
| 50-100 | 3.4 | 2.2 | 2.6 | 2.9 | 3.2 | 2.9 | 3.1 | 3.2 |
| 100-250 | 4.9 | 2.6 | 3.2 | 4.0 | 3.7 | 3.5 | 3.6 | 3.5 |
| Total | 3.5 | 2.7 | 2.7 | 3.1 | 3.7 | 2.8 | 3.1 | 3.3 |
*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.
View the PDF version of M&A Quarterly