Takeover market in Belgium: Prices come to a halt

For the first time in six years, the M&A Monitor of the Vlerick Business School shows that the acquisition prices in 2018 will no longer rise across the board.

All players of the Belgian M&A market are requested to participate to this yearly survey. The main conclusions for the past year are:

- An average of 6.5 times the EBITDA value (i.e. the operational cash flow) is paid across all acquisition segments..

(EV = Enterprise Value)

- The prediction for the near future are quite modest: only 40% expects a future increase of deals, 38% thinks the amount of deals will stabilize and 22% even predicts a decrease.

- Further growth is still expected in the segment of smaller companies with a value of less than 1 million €. Competition in the medium-sized transactions segment (between 5 and 50 million) is fierce, which means that many interested buyers move to the smaller deal segment, where there are more opportunities.

- On average, 31% of the acquisition amount is financed with own equity..

- For 1 in 3 acquisitions, the transferor is asked to grant a vendor loan, whereby part of the payment is deferred and spread over several years.

- In 25% of the acquisitions, a part is financed by the transferor via an earn-out, with a part of the payment depending on the future performance of the acquired company.

Source : M&A Monitor

Deals are more often on the loose

Now that the European Central Bank has further reduced interest rates, it seems to be a good time for mergers and acquisitions. But nothing could be further from the truth, because concerns about economic developments prevail.

Virginie Beck