M&A Activity in the UK Mid-Market and the impact on EBITDA multiples

However, the M&A mid-market has remained resilient, although the second half of 2022 was quieter than the first half, with rising inflation and increased interest rates impacting company transaction appetite. In the second half of 2022 both volumes and average transaction sizes decreased according to Dealsuite’s February market monitoring report. 

The key drivers for M&A activity and price paid for a company remain:

  • the sector that a company operates in; and 
  • the size of the company’s EBITDA. 

According to Dealsuite’s report, in 2022, average multiples paid for Companies ranged from below 3x EBITDA for companies in sectors including Construction and Engineering and Wholesale Trade to around 8x for Software Development and Healthcare businesses. 

In addition, on average, the lower a company’s EBITDA, the lower the multiple paid. For example, companies with an EBITDA of c£500k could expect a multiple of 4.3x EBITDA, however a company with an EBITDA of £2m could expect a multiple of 6.3x. However it should be noted that these averages do not reflect factors such as synergistic benefits and existing company and management structures which may impact on the desirability of a business. 

UHY are seeing continuing demand in the market from both buyers looking at acquiring and shareholders looking at an exit from their business. If you are looking at disposing of a shareholding or looking at a potential acquisition strategy, please get in touch to arrange a confidential introductory discussion. 

The next step

For any future questions please contact Fraser Pirie, or your usual UHY adviser. 

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