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What next for deal multiples?

It is interesting to speculate what is likely to happen with deal multiples (and the consequent impact on prices) in the short term as restrictions begin to unwind.

Part of the answer may be found in the British Private Equity & Venture Capital Association (“BVCA”) report on Investment Activity 2019. There is likely to be many Private Equity and Venture Capital Houses around with funds to invest as demonstrated by the following table...
GraphIt is reasonable to assume that the almost £50 billion of additional funds to invest generated during the three years to FY2019 is probably burning a hole in various fund managers pockets. It follows that finding somewhere to invest these funds should help underpin deal multiples at around their current levels as the economy reopens. 

The longer term prospects for deal multiples and values will obviously be impacted by various macro economic factors – including Government policy and quantitative easing. However, these prospects are something to ponder about on another day.

The next step

For further advice, please contact Mike Carney, your local UHY adviser or visit our corporate finance page for further information about how we can help. 

 

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