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:

For 2019:

  • 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. 

For 2020:

  • 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.