Multiples on private trade rise in the second quarter

MULTIPLES paid by trade buyers for private companies rose sharply in the second quarter of the year, BDO’s private companies price index revealed today.

Price to earnings (p/e) multiples spiked to 10.8 in the three months to June, from 9.0 in the first quarter of the year.

“With stabilising deal volumes and lower volatility in pricing, the scene is set for the continued reduction in the price expectation gap between buyers and sellers,” said Christopher Clark, M&A partner at BDO.

Yet the number of trade deals fell 11.5 per cent in the second quarter. The index recorded 371 deals, down from 419 in the opening three months of the year.

The number of private equity acquisitions came in at 68, down from 98 in the first quarter of 2011.

The first half of the year saw 166 PE deals, slightly more than in the second half of last year (161 deals).