M&A Quarterly Newsletter – September 2022

by Taureau Group

Market Summary

  • Completed deal volume was down markedly in the first half of 2022, while valuations for mid-market companies acquired by private equity groups and other deal sponsors held strong at an average of 7.4x EBITDA.
  • Total debt averaged 3.9x in the first half of the year, down slightly from an average of 4.0x for all of 2021. For senior debt, the average was 3.2x for the last two quarters, compared to 3.3x for all of 2021.
  • The two industries showing the highest EBITDA multiples during Q2 2022 were technology and health care services at 10.0x and 8.6x, respectively. EBITDA multiples for all manufacturing companies averaged 7.1x in the first half of the year, in line with 2021.
  • While volume is down, businesses with above-average financial characteristics continue to account for an increased portion of completed deal activity. These deals comprised 68 percent of the total, up from 66 percent in 2021.
  • In the first six months of the year the average multiple for buyouts was 7.2x, compared to 7.4x overall.

What’s New at Taureau Group

  • June – Engaged by niche metal manufacturer for consideration of potential sale.
  • June – Completed sale of The Kinetic Co., Inc. to Precision Marshall, a subsidiary of Live Ventures Incorporated (Nasdaq: LIVE). 
  • June – Taureau Group published its 2022 Volume II Information Technology (IT) Services Industry Report. 
  • June – Completed the acquisition of Rebuild-it Services Group (RSG) for Sentry Equipment Corp. 
  • July – Ron Burgers, one of our talented analysts, is our Featured Team Member.
  • August – Taureau Group team members attended Milwaukee Business Journal’s 2022 Best Places to Work awards luncheon.
  • September – Ciara Jones, one of our talented analysts, is our Featured Team Member.
  • September – Taureau Group published its 2022 Volume II Packaging & Printing Industry Report.
  • September – Travis Kalmuck joined Taureau Group as a Senior Analyst.

No business is immune to all of the current economic challenges, not to mention hangover effects of the pandemic. However, there is considerable evidence that well-established companies serving targeted niche markets are continuing to command strong interest, while lesser businesses are trading at lower multiples or not at all. What is apparent in the numbers is a greater share of generously valued deals being completed as leveraged recaps, rather than as change-of-control transactions.

Active Broad Acquisition Searches

  • ESOP client looking to establish new platforms in a variety of niche manufacturing and business service industries with EBITDA of $2 million or more and total enterprise values (TEV) 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.
  • 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 Insights

  • 2022 Volume II Information Technology (IT) Services – Download the industry report here.
  • 2022 Volume II Packaging & Printing – Download the industry report here.

Market Statistics

Total Enterprise Value (TEV)/EBITDA*

TEV ’03-17 ’18 ’19 ’20 ’21 YTD’22 Total
10-25 5.7 6.0 6.1 5.9 6.1 6.3 5.8
25-50 6.4 6.9 7.0 6.7 7.2 6.7 6.6
50-100 7.3 8.9 7.5 8.0 8.4 9.2 7.6
100-250 8.0 8.8 9.2 8.7 9.3 9.3 8.4
Total 6.5 7.2 7.1 7.0 7.4 7.4 6.7

TEV/EBITDA—By Industry Category*

Industry ’03-17 ’18 ’19 ’20 ’21 YTD’22 Total
Manufacturing  6.1 6.8 6.5 6.7 7.1 7.1 6.3
Business services 6.5 7.1 7.2 7.1 7.3 7.5 6.8
Health care services 7.3 7.8 8.0 7.6 8.0 8.3 7.5
Retail 6.7 8.1 9.3 6.5 8.6 8.0 7.1
Distribution 6.5 6.9 7.0 7.5 7.3 6.6 6.8
Media & Telecom 7.4 7.8 9.4 8.3 6.3 7.3 7.5
Technology 8.2 9.6 10.0 7.6 10.3 10.0 8.6
Other 6.2 7.2 6.5 6.2 7.3 7.6 6.4

Senior Debt/EBITDA—Splits by Period*

TEV Q320 Q420 Q121 Q221 Q321 Q421 Q122 Q222
10-25 2.7 3.0 4.2 2.8 2.3 3.5 3.1 2.5
25-50 2.6 2.9 3.3 2.5 3.5 2.9 3.5 2.5
50-100 2.6 2.9 3.2 3.0 3.1 3.2 3.5 3.5
100-250 3.2 4.0 4.2 3.5 3.7 3.5 2.9 3.7
Total 2.7 3.1 3.8 2.8 3.1 3.2 3.3   3.0

*Source: GF Data®. Information included from GF Data may not be used or re-published without permission from GF Data or Taureau Group.


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