M&A Quarterly Newsletter – June 2024
by Taureau Group
Market Summary
- Valuations on deals completed in 1Q 2024 averaged 6.6x TTM adjusted EBITDA, down more than a half-turn on EBITDA from the 7.2x average from 4Q 2023, with larger transactions seeing the greatest decline in valuation.
- The two industries showing the highest EBITDA multiples through 1Q 2024 were media & telecom at 8.8x and technology at 7.2x. EBITDA multiples for all manufacturing companies averaged 6.1x through 1Q 2024, compared to the 6.5x average in 3Q 2023.
- Deals valued between $10 million and $25 million held firm at an average 6.3x, the same as 4Q 2023 and, on an annualized basis, valuations on deals in this cohort were up by 0.3x compared to 2023.
- Add-ons accounted for 43% of deals in 1Q 2024, well above the 35% average in 2023.
- Buyout deals recorded an average purchase price of 6.5x for 1Q 2024, compared to 7.2x in 2023.
- The average coupon on subordinated debt increased slightly in 1Q 2024, rising to 12.0%, compared to 11.9% in 4Q 2023.
- There was a rebound in debt contribution on smaller deals valued between $10 million and $25 million, indicating improved lending conditions in this size tier. Senior debt contribution notably increased by nine percentage points from 47.4% in 2023 to 56.4% in 2024 YTD.
What’s New at Taureau Group
- March – Completed the sale of Magview, LLC to Warne Scope Mounts, Inc., a portfolio company of Maple Hill Capital.
- April – Engaged by recycling systems design and engineering company for potential sale to a strategic partner.
- April – Completed the recapitalization of JR Machine to Schneider Resources Holding Company, LLC.
- May – Taureau Group sponsored Isla Bella Coffee Roasters’ Drink of the Month at the BizStarts Community Market.
- May – Corey Vanderpoel attended Automate in Chicago, the largest show in North America entirely dedicated to automation solutions.
- May – Engaged by early-stage medical device and software company to sell recurring revenue business to strategic buyer.
- May – Engaged by niche packaging company for consideration of potential sale.
- June – Brendan Witt joined the team as an Analyst Intern. Learn more about Brendan here.
- June – Ann Hanna is quoted in BizTimes Milwaukee Magazine’s article discussing the working capital adjustment part of the sell-side process.
- June – Taureau Group published its 2024 Volume I Packaging & Printing Industry Report.
- June – Taureau Group is named one of Milwaukee’s Best Places to Work by the Milwaukee Business Journal for the fourth consecutive year.
The first quarter of 2024 brought a resurgence of deal volume in the middle market, and the dampened valuations set the stage for continued improvement in deal volume for the remainder of 2024.
Active Broad Acquisition Searches
- Acquisition opportunities for a private equity platform company looking for residential exterior repair & restoration companies in Southeast U.S. with revenues greater than $5 million.
- Acquisition opportunities for a holding company looking for established electrical contractor companies in Southeast Wisconsin with revenues between $10 million – $25 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 company looking for steel erectors focused on the West/Northwest U.S. market with revenues less than $40 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.
Featured Insights
- What’s the Working Capital Adjustment and Why is it a Pain Point in Selling a Business – Read the article here.
- 2023 Volume I Packaging & Printing 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 | 6.3 | 5.9 |
| 25-50 | 6.5 | 6.7 | 7.2 | 7.0 | 7.0 | 6.0 | 6.7 |
| 50-100 | 7.5 | 8.0 | 8.3 | 8.5 | 8.0 | 8.2 | 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 | 6.6 | 6.8 |
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 | 6.1 | 6.4 |
| Business services | 6.7 | 7.1 | 7.3 | 7.4 | 7.2 | 6.9 | 6.9 |
| Health care services | 7.4 | 7.6 | 8.1 | 8.4 | 9.0 | 6.4 | 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 | 7.1 | 6.8 |
| Media & Telecom | 7.6 | 8.3 | 7.0 | 9.1 | 7.8 | 8.8 | 7.7 |
| 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 | 7.2 | 6.4 |
Senior Debt/EBITDA—Splits by Period (platforms only)*
| TEV | 2Q22 | 3Q22 | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | 1Q24 |
|---|---|---|---|---|---|---|---|---|
| 10-25 | 1.9 | 2.1 | 1.9 | 1.9 | 2.2 | 1.1 | 2.2 | 2.3 |
| 25-50 | 2.2 | 2.4 | 2.2 | 2.2 | 1.5 | 2.9 | 1.4 | 1.9 |
| 50-100 | 3.6 | 2.7 | 2.6 | 2.4 | 2.2 | 2.5 | 2.1 | 2.3 |
| 100-250 | 3.6 | 4.0 | 3.0 | 3.0 | 3.3 | 3.5 | 3.3 | 2.1 |
| Total | 2.8 | 2.7 | 2.3 | 2.4 | 2.3 | 2.7 | 2.2 | 2.1 |
*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.