• EBITDA multiples to hit 11.3x, up 23% on reported 2013 figures
  • 2013 deal volumes hit 14,000, a six-year high
  • TMT companies worth the most, estimated to reach 11.7x by 2015

The amount buyers are willing to pay for companies will reach 11.3x EBITDA by 2015, a jump of 23% compared with reported 2013 figures. This comes amidst improving macroeconomic conditions in the US and Europe, maintained performance in China, improved debt markets and more available capital by companies and private equity firms alike. This upward trajectory is further evidenced by the number of global deals, which reached 14,000 in 2013, the highest number of M&A transactions since 2007.

global M&A valuation

Technology, media and telecom companies saw the biggest rise in M&A, including higher volumes, greater values and increasing multiples. TMT companies saw multiples jump to 9.5x in 2013 and a post-crisis peak of 11.7x is expected in 2015. Meanwhile, total deal values rose in the sector from $331bn in 2012 to $511bn in 2013. Consolidation is rife, with transactions such as Vodafone Group Plc (ADR) (NASDAQ:VOD) (LON:VOD)’s acquisition of ONO in Spain for €7.2bn, Vivendi SA (EPA:VIV) (OTCMKTS:VIVHY) selling SFR to Altice for €17bn and the current sale process of Get AS, Norway’s second-largest cable operator.

Global M&A outlook

In geographic terms:

  • Asia-Pacific M&A has continued to grow steadily, with a decline in India offset by activity in China, where multiples should reach 12.6x in 2015 due to economic reforms.
  • Europe remains divided, with valuations in Northern and Western Europe climbing in 2013 but multiples in Southern Europe down on the previous year and a flat outlook for the region.
  • M&A valuations in the Americas are expected to rise, with recovery in North America, buyout debt markets and strong cash positions by corporates underpinning expectations of growth.
  • Meanwhile, Latin American countries can attribute much of their growth to interest by foreign investors.

Global M&A activity

These are some of the findings from Global M&A Valuation Outlook 2014, a report published today by global valuation specialists American Appraisal. The wide-reaching report, now in its third year, draws on in-depth analysis of American Appraisal’s own data from deals compiled in 24 countries combined with industry data on international corporate deal flow and independent interviews conducted with senior executives across the world.

Mike Weaver, Managing Director at American Appraisal, commented:

“With surging deal values in many pockets of the world, M&A is back with a vengeance. After a freeze on liquidity, cash-rich companies and freshly funded private equity firms are aggressively pursuing transactions, whether it’s to diversify, own trophy assets or back underutilised businesses. There seems to be a buyer for everything at the moment and some people are paying top whack.”

See full Global M&A Valuations To Hit ’07 Levels: 11.3x A Rise Of 23% in PDF format here.