Over the past year to November 2018 (prior to the recent Brexit events!) we have seen increasing confidence and an increasing number of corporate finance transactions, including a number of acquisition approaches being made for businesses.
As confidence has grown, we have seen the prices which are being offered increasing.
This is reflected in the figures recently released by the UK200Group with the publication of the Small and Medium Valuation Index.
The Small and Medium Enterprise Valuation Index is constructed by the UK200Group on an annual basis to November each year. It is based on anonymised data provided by its members (including Lambert Chapman) on real transactions in the year.
The index details the average multiples paid for businesses (either as asset or share deals) based on their earnings and also details the average size of deals which have being completed.
The 2018 index shows the (median) price to earnings ratio has increased to a multiple of 8, with an average deal size of £4.4m. As a firm, we have seen increasing multiples being paid with buyers actively looking for acquisitions.
In reviewing the index, the average deal size and composition of the sample need to be considered.
Further detail on the valuation index is available on the UK200Group website.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.