The link between the size of a company and the level of the takeover price can be regarded as a positive causal relationship.
Brookz
In a study by Brookz (a Dutch M&A platform), the M&A Barometer H1-2019, examined the above correlation within the Dutch SME sector. This study shows that a lower EBITDA multiple is more frequently paid for smaller companies. This can be explained by certain risks that are more prevalent in small(er) companies, including dependence on specific customers or reliance on company-specific knowledge, which can rapidly diminish when staff leave.
These risks have a value-depressing effect, with the result that the EBITDA multiples paid for larger companies are, on average, higher. This results in a difference of 14% between companies with normalised EBITDA of €250,000 and €5,000,000. This difference has increased by 3% compared with the first half of 2018.
The Takeover Barometer is a half-yearly survey conducted by Brookz which discusses trends and developments in the SME acquisition market. A new Acquisition Barometer will be published shortly, and we will share its findings with you.
# value # Brookz # EBITDA # MKB