M&A market remains on course for year of strong deal making

shutterstock.com / bleakstar

The M&A market remains on course for another year of strong deal making with a further 619 transactions completed in Q3, according to the latest analysis from accountancy and business advisory firm BDO LLP.

BDO’s PCPI / PEPI* quarterly report shows that the PE market is particularly healthy, with 305 PE deals recorded so far in 2018. Full year volumes of PE deals are expected to be well ahead of 2017, which saw 334 deals complete.

In spite of the economic and political uncertainties arising from Brexit negotiations, the M&A market remains settled and strongly committed to completing transactions.

Alongside climbing volumes, the third quarter of 2018 saw valuations holding firm, with double-digit EV/EBITDA multiples continuing in Q3 2018. These indices, which track the multiples paid by trade and private equity buyers for private companies, underline the health of the current M&A market.

In the third quarter of 2018 the PCPI returned the levels seen over recent quarters (10.0x). The Private Equity Price Index (PEPI), which tracks the multiples paid by private equity buyers, has seen average valuations fluctuating a little more, but continued to reflect the long-term trajectory of attractive valuations in Q3 (12.0).

Roger Buckley, M&A Partner at BDO, said: “No-one knows for certain if we have hit the top of the market, but we see no slowing in the market with a robust profile of ongoing M&A activity and significant levels of corporate and PE capital seeking the right transaction.”