Looking Back to Move Forward

The Alliance of Merger & Acquisition Advisors (AM&AA) is the premier international organization serving the educational and resource needs of middle-market M&A professionals. AM&AA surveys its membership annually to provide insights into sell-side transaction multiples of earnings before interest, taxes, depreciation, and amortization (EBITDA) and sell volumes completed in the second half of 2014; generating The Deal Stats Transaction Survey.

Based on the survey, average and median multiples for done deals have risen; the average multiple increasing from 5.52 to 5.64 times EBITDA and the median multiple increasing from 5.12 to 5.37. Also, the total number of deals has increased, and transaction dollar volumes have remained above historical levels. Average EBITDA multiples by industry were: Construction – 4.87; Manufacturing – 5.68; Wholesale Trade – 6.54; Retail Trade – 6.02; and Professional Services – 5.32.

The traditionally positive relationships between EBITDA multiples (higher), transaction size (total consideration), and company revenues were observed in this Survey as well. The principal reason cited by the members of AM&AA for companies with higher EBITDA multiples – higher growth opportunities and high synergy possibilities for the buyer.