Q1 2019 summary

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This report identifies key themes driving European private equity (PE) deals’ EV/EBITDA multiples on a quarterly basis. The objective is to assist PE investors in understanding drivers behind value trends across regions and sectors, leading to good investment opportunities.

The average value for PE backed transactions in Q1 2019 increased by nearly 15% when compared to the previous quarter, and there was a 10% increase in the average multiple when compared with the same quarter in 2018.

The hottest region for the quarter was the Nordic region with the average multiple being 14% higher than the next closest region, the UK and Ireland. The Nordic region’s average multiple jumped over 40% from the last quarter and was the highest we have seen in the region since our analysis began.

Also for the first time since our analysis began, the DACH region experienced the lowest average multiple of all the regions despite an increase of 17% compared with the previous quarter.

Pricing increases were seen in all other regions in the quarter with the Southern region experiencing its highest average multiple since Q1 2017 and Benelux experiencing its highest average multiple since Q2 2017. Central Europe and France experienced more modest growth with 11% and 6% respective increases in average multiple when compared to the 2018 average.

The financial services sector saw the richest pricing in the quarter, with the average multiple in the sector up 16% from the average in 2018. The financial services sector was closely followed by the TMT and healthcare sectors where multiples were up 30% against the previous quarter.

The consumer sector also saw strong growth with the average multiple being the highest since Q2 2017. The average multiple in Q1 2019 was also up 15% against the average multiple for 2018.

Multiples remained flat for the quarter in both the business services and industrials and chemicals sectors and the average multiple was down 6% and 3% respectively when compared to the average in both sectors in 2018.

In terms of deal size and for the third quarter in a row, the highest multiples were seen in the >€500m deal range despite a drop in the average multiple of 4% in Q1 2019 versus the average from the previous two quarters.

Deals valued in the €50-250m range saw the greatest volatility with a 29% increase in the quarter at the upper end of the range and a more modest growth rate of 9% in the lower end of the range. Despite a 5% increase in the average multiple, the sub €50m category saw the lowest pricing of PE backed transactions in the quarter.

Deals in the €250-500m range saw an increase of 15% in the average multiple for the quarter, but the increase when compared to the 2018 overall average was more modest at 5%.

In this quarter, the Multiples Heatmap focuses on trends seen in the UK region and the TMT sector.

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