Q3 2019 summary
Q3 2019 saw a slight reduction of 1% in average multiples paid in PE backed transactions throughout Europe when compared with the previous quarter. This continues the trend of gradual multiple decline during 2019 from its peak in the first quarter of the year.
The UK and Ireland was the second hottest region in the last quarter but in Q3 2019, the region saw the joint highest multiples throughout Europe with average multiples up 7% from Q3 2018 and up 1% on the previous quarter.
Despite a 2% reduction in average multiple when compared to the previous quarter, the Nordic region saw the same valuation levels as the UK and Ireland in Q3 2019, closely followed by France despite the region also seeing a 2% reduction in average multiples versus the previous quarter.Other than the UK and Ireland, the Southern region (read more in our interview with Andrea Pagliara) was the only area to see an increase in average multiples during the quarter which continued the trend of gradual multiple increase in the region throughout 2019.
The DACH region saw a reduction in average multiples of 7% in the quarter. For the second quarter in a row average valuations declined whilst Central and Eastern Europe and Benelux saw more modest reductions of 1%. The DACH region has also experienced the strongest average multiple decline of any region throughout 2019.
For the fourth quarter in a row, the Financial Services sector saw the richest valuations, with a further increase in average multiple of 2% on the previous quarter.
TMT was the second hottest sector in the quarter despite a 1% reduction in average multiple when compared with Q2 2019 and a reduction of 4% when compared with the same quarter in 2018. Growth was also seen in the Food and Beverage sector (read more in our interview with John Sheridan) with a 2% increase in average valuation, whilst more modest growth of 1% was experienced in Healthcare and Consumer.
The lowest average multiples and the largest decline in average multiples was seen in the Automotive sector with a 4% drop in average multiple versus the previous quarter and a 2% drop in average multiples when compared with the same quarter in 2018.
Business Services also saw a 4% drop in average multiples in the quarter with a more modest decline of 3% seen in Industrials and Chemicals.
In terms of deal size, and for the second quarter in a row, the richest valuations were seen in transactions >€1bn, up 1% on the previous quarter and up 9% from the same quarter in 2018.
The second hottest deal range was €500m-€1bn, again for the second quarter in a row, with multiples up 1% on the previous quarter but 20% up on the same period in the prior year and 2% quarter and year on year growth was seen in the €100m-€250m deal range.
Drops in average multiples were experienced in both the €250m-€500m and sub €100m categories with quarterly drops of 4% and 3% respectively, with the former seeing the sharpest drop in multiples through 2019