Transmission of businesses in Wallonia: look back on 2019 and 2020 perspectives
Sowaccess's annual report on business transfers gives a very good overview of how the acquisition market is doing in Wallonia. 2020 brings a lot more uncertainty. Here is a summary of the report:
The average EV/EBITDA*- multiple in Wallonia is 6,4.
31% of transactions foresee a vendor loan; 22% have an earn-out clausule.:
Reaching the pension age is the main reason for selling the business in small acquisitions. The will to make a financial gain is more important in bigger transactions.
We can expect to go from a sellers market to a buyers market.
It is very likely that the market will be dominated by strategic and financial buyers as they have more liquidity and a real strategy behind their acquisitions.
Acquisition experts estimate that the number of transactions will drop by at least 10% in 2020. For 45% of the respondents, we can even expect a decrease of more than 25%.
The impact on the selling prices will depend much on the business sector in which the company operates, and whether it has experienced the crisis well, or not. A rising EV/EBITDA multiple is what experts are announcing for sectors as the pharmaceutical sector, digital, medtech, highly digitalized companies, or counter-cyclical sectors. Conversely, the heavily impacted sectors, such as the hotel and catering industry, retail businesses or construction, risk seeing the multiple decrease... at least according to experts.
To qualify the impact on the EV/EBITDA multiple, experts recommend isolating the months of crisis, or even 2020, corporate valuations.
Source: Sowaccess rapport « La transmission d’entreprises en Wallonie : retour sur 2019 et perspectives 2020 »
*EV = enterprise value.