Pitchbook's research on the US private equity market shows that the % of debt used in deals is starting to increase due to the larger size of deals and that PE is focusing on companies with proven sales growth.
The EBITDA multiple in the <50MM$ operations has been approximately 5 times.
During 2012, the multiple used to calculate the price of transactions has remained stable between 4 and 5 times EBITDA for transactions below 50MM$. The statistics reflect a very high multiple disparity depending on the size of the transaction. For example for deals larger than 500MM$ the multiple fluctuated between 10 and 15 times. A much higher multiple than for smaller transactions and with much more variation between quarters. For sizes between 70 and 100MM$ the multiple has been between 7 and 8 times EBITDA.
In 2012 almost more than two thirds of the operations had a multiple greater than 5 times EBITDA.
75% of the transactions were for companies with growth in turnover in the period prior to the acquisition.
PE firms focused their attention on investing in companies with strong revenue growth and stable prospects in Q4 2012. More than 75% of the companies acquired in Q4 had increased revenues in the past 12 months, and more than three quarters of respondents forecast revenue growth in the coming year as well.
The EP used almost the same amount of equity and senior debt during 2012.
The average amount of debt in PE transactions rose from 46% in Q3 to 57% in Q4 after declining throughout the first three quarters of the year. According to the "PitchBook 2013 Annual Private Equity Breakdown", there was a significant spike in the number of decisions in Q4 2012, especially in large transactions of $ 1 billion and above. Because of this, the increase in the average debt used is not surprising due to larger transactions using higher levels of debt.
Diego Gutiérrez Zarza