M&A Quarterly Newsletter – September 2024
by Taureau Group
Market Summary
- Average purchase price multiples on completed deals in 2Q 2024 reached 7.4x TTM EBITDA, an increase of a half turn of EBITDA from the 1Q 2024 average.
- The two industries showing the highest EBITDA multiples through 2Q 2024 were media & telecom at 7.3x and technology, distribution, health care services and business services, all at 7.2x. EBITDA multiples for all manufacturing companies averaged 6.8x through 2Q 2024, compared to the 6.5x average in 2023.
- Deals valued at less than $100 million and deals valued above $250 million all saw increases in average valuation; however, deals valued between $100 million and $250 million declined in average valuation by more than 1.5x EBITDA, possibly reflecting that higher quality businesses in this size tier remain on the sidelines.
- Add-ons accounted for 44% of deals in 2Q 2024, well above the 35% average in 2023.
- Buyout deals recorded an average purchase price of 7.0x for 2Q 2024, a significant improvement on the 6.5x average reported in 1Q 2024, but still off the 7.2x average in 2023.
- The average coupon on subordinated debt increased slightly in 2Q 2024, rising to 11.8%, compared to 11.7% in 1Q 2024.
- Senior debt pricing and average contribution across all deals improved modestly through 2Q 2024, but leverage challenges remain for the market. Total debt coverage averaged 3.7x, compared to an average of 3.6x in 2023. Average senior coupon declined in 2Q 2024, decreasing to 9.3% compared to 9.4% in 1Q 2024, and well off the 11% average in 4Q 2023, with further rate decreases expected.
What’s New at Taureau Group
- June – Brendan Witt joined the team as an Analyst Intern.
- June – Taureau Group is named one of Milwaukee’s Best Places to Work by the Milwaukee Business Journal for the fourth consecutive year.
- July – Nick Mydlach, Vice President & Shareholder, welcomed a healthy baby girl to the family.
- July – Announced promotions including: Jacob Meehan to Vice President, Jake Mende to Senior Associate, Travis Kalmuck to Associate and Hayden Wage to Senior Analyst.
- July – Completed the acquisition of BirdBrain Technologies LLC for RW Thrive, the 100% employee-owned parent company of Realityworks, Inc.
- August – Engaged by energy analytics company for consideration of potential sale.
- August – Taureau Group’s exterior signage is installed on the east side of the Historic Dye House in Third Ward.
- September – Taureau Group published its 2024 Volume I Industrial & Contract Manufacturing Industry Report.
Middle market deal activity rallied in the first half of 2024, putting the year on pace to surpass both 2023’s and 2022’s reported deal volume. However, the big story wasn’t deal flow but rather deal quality and deal type.
Active Broad Acquisition Searches
- Acquisition opportunities for a private equity platform company looking for leak detection and repair companies in the U.S. market with revenues greater than $5 million.
- ESOP client looking to make acquisitions of educational services, and CTE products and software companies with revenues between $5 million – $20 million.
- Acquisition opportunities for a private equity platform company looking for CRO, CMO, and CDMO companies specializing in medical devices with revenues between $5 million – $100 million.
- Acquisition opportunities for a private company looking for metal and plastic low to medium volume manufacturers with revenues between $5 million – $30 million.
- ESOP client looking to make acquisitions of wholesale build products distributors with revenues between $5 million – $50 million.
- Acquisition opportunities for a private equity platform company looking for building envelope solutions companies in Midwest U.S. with revenues between $5 million – $30 million.
- Acquisition opportunities for a private company looking for fuel distribution companies across Midwest and Eastern U.S. with revenues greater than $5 million.
- Acquisition opportunities for a private equity platform company looking for residential roofing, siding, and windows services firms with revenues greater than $20 million.
- Acquisition opportunities for a private equity platform company looking for aerospace, defense and space exploration components manufacturers with revenues greater than $5 million.
Featured Insights
- Specialists in Advising Production Equipment Manufacturers – Learn more here.
- Specialists in Leading ESOPs through Acquisition Growth – Learn more here.
- 2023 Volume I Industrial & Contract Manufacturing Industry Report – Download the report here.
Market Statistics
Total Enterprise Value (TEV)/EBITDA*
| TEV | ’03-19 | ’20 | ’21 | ’22 | ’23 | YTD’24 | Total |
|---|---|---|---|---|---|---|---|
| 10-25 | 5.8 | 5.9 | 6.1 | 6.4 | 6.0 | 6.4 | 5.9 |
| 25-50 | 6.5 | 6.7 | 7.2 | 7.0 | 7.0 | 6.4 | 6.7 |
| 50-100 | 7.5 | 8.0 | 8.3 | 8.5 | 8.0 | 8.7 | 7.7 |
| 100-250 | 8.2 | 8.7 | 9.3 | 9.1 | 9.6 | 8.3 | 8.5 |
| Total | 6.6 | 7.0 | 7.6 | 7.5 | 7.2 | 7.1 | 6.9 |
TEV/EBITDA—By Industry ($10-$250M TEV)*
| Industry | ’03-19 | ’20 | ’21 | ’22 | ’23 | YTD’24 | Total |
|---|---|---|---|---|---|---|---|
| Manufacturing | 6.2 | 6.7 | 7.1 | 7.3 | 6.5 | 6.8 | 6.4 |
| Business services | 6.7 | 7.1 | 7.3 | 7.4 | 7.2 | 7.2 | 6.9 |
| Health care services | 7.4 | 7.6 | 8.1 | 8.4 | 8.9 | 7.2 | 7.6 |
| Retail | 7.0 | 6.5 | 8.3 | 8.0 | 6.0 | 6.4 | 7.1 |
| Distribution | 6.6 | 7.5 | 7.2 | 7.2 | 7.1 | 7.2 | 6.8 |
| Media & Telecom | 7.6 | 8.3 | 7.0 | 9.1 | 7.8 | 7.3 | 7.6 |
| Technology | 8.5 | 7.6 | 10.3 | 8.1 | 10.2 | 7.2 | 8.6 |
| Other | 6.3 | 6.2 | 7.3 | 6.7 | 6.9 | 6.4 | 6.4 |
Senior Debt/EBITDA—Splits by Period (platforms only)*
| TEV | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 | 2Q24 |
|---|---|---|---|---|---|---|---|---|
| 10-25 | 2.1 | 1.9 | 1.9 | 2.2 | 1.1 | 2.2 | 2.3 | 1.8 |
| 25-50 | 2.4 | 2.2 | 2.2 | 1.5 | 2.9 | 1.4 | 2.0 | 1.9 |
| 50-100 | 2.7 | 2.6 | 2.4 | 2.2 | 2.5 | 2.1 | 2.4 | 3.1 |
| 100-250 | 4.0 | 2.7 | 3.0 | 3.3 | 3.5 | 3.3 | 3.0 | 2.8 |
| Total | 2.7 | 2.3 | 2.4 | 2.3 | 2.7 | 2.2 | 2.2 | 2.3 |
*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.