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Capstone Partners Reports: Middle Market M&A Valuations Ease, Market Players Retain Confidence in a Turnaround in 2025

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Capstone Partners has released its 2024 Middle Market M&A Valuations Index, revealing a stabilization in M&A activity despite ongoing challenges. Average middle market M&A valuations declined to 9.4x EV/EBITDA in 2024, down from 9.6x in 2023 and 9.9x in 2022.

Several sectors showed resilience with improved EBITDA purchase multiples, including Agriculture, Business Services, Consumer, Energy, Financial Technology & Services, Healthcare, and Industrial Technology. The share of deals closing at 10.0x EBITDA or higher increased by 56.3% in 2024.

Notable trends include:

  • Average enterprise value of targets rose to $166.8 million in 2024 from $112.5 million in 2023
  • Gross margins improved to 41.3% from 32.3% in 2023
  • Interest coverage ratio increased to 4.3x from 3.7x in 2023
  • Private equity platform acquisitions grew 4.7% YOY in 2024

Capstone Partners ha pubblicato il suo Indice di Valutazione M&A del Mercato Intermedio 2024, rivelando una stabilizzazione nell'attività di M&A nonostante le sfide in corso. Le valutazioni medie M&A del mercato intermedio sono scese a 9,4x EV/EBITDA nel 2024, in calo rispetto a 9,6x nel 2023 e 9,9x nel 2022.

Diversi settori hanno mostrato resilienza con un miglioramento nei multipli di acquisto EBITDA, tra cui Agricoltura, Servizi alle Imprese, Consumo, Energia, Tecnologia e Servizi Finanziari, Sanità e Tecnologia Industriale. La quota di affari conclusi a 10,0x EBITDA o superiore è aumentata del 56,3% nel 2024.

Tendenze significative includono:

  • Il valore medio d'impresa degli obiettivi è aumentato a $166,8 milioni nel 2024 rispetto a $112,5 milioni nel 2023
  • I margini lordi sono migliorati al 41,3% rispetto al 32,3% nel 2023
  • Il rapporto di copertura degli interessi è aumentato a 4,3x rispetto a 3,7x nel 2023
  • Le acquisizioni di piattaforme di private equity sono cresciute del 4,7% su base annua nel 2024

Capstone Partners ha publicado su Índice de Valoraciones M&A del Mercado Medio 2024, revelando una estabilización en la actividad de M&A a pesar de los desafíos continuos. Las valoraciones promedio de M&A del mercado medio cayeron a 9.4x EV/EBITDA en 2024, bajando de 9.6x en 2023 y 9.9x en 2022.

Varios sectores mostraron resiliencia con múltiplos de compra EBITDA mejorados, incluyendo Agricultura, Servicios Empresariales, Consumo, Energía, Tecnología y Servicios Financieros, Salud y Tecnología Industrial. La proporción de acuerdos cerrados a 10.0x EBITDA o más aumentó en un 56.3% en 2024.

Tendencias notables incluyen:

  • El valor promedio de las empresas objetivo aumentó a $166.8 millones en 2024 desde $112.5 millones en 2023
  • Los márgenes brutos mejoraron al 41.3% desde el 32.3% en 2023
  • El ratio de cobertura de intereses aumentó a 4.3x desde 3.7x en 2023
  • Las adquisiciones de plataformas de capital privado crecieron un 4.7% interanual en 2024

Capstone Partners는 2024년 중간 시장 M&A 평가 지수를 발표하며 지속적인 도전에도 불구하고 M&A 활동이 안정세를 보이고 있음을 밝혔습니다. 중간 시장 M&A 평균 평가는 2024년 9.4x EV/EBITDA로 감소했으며, 이는 2023년 9.6x 및 2022년 9.9x에서 하락한 수치입니다.

농업, 비즈니스 서비스, 소비재, 에너지, 금융 기술 및 서비스, 헬스케어, 산업 기술 등 여러 분야에서 EBITDA 구매 배수가 개선되며 회복력을 보였습니다. 2024년에는 10.0x EBITDA 이상으로 거래가 마감된 비율이 56.3% 증가했습니다.

주요 트렌드로는:

  • 목표 기업의 평균 기업 가치가 2023년 1억 1천 2백 5십만 달러에서 2024년 1억 6천 6백 8십만 달러로 증가했습니다.
  • 총 마진이 2023년 32.3%에서 41.3%로 개선되었습니다.
  • 이자 보상 비율이 2023년 3.7x에서 4.3x로 증가했습니다.
  • 사모펀드 플랫폼 인수는 2024년 4.7% 증가했습니다.

Capstone Partners a publié son Indice des Évaluations M&A du Marché Intermédiaire 2024, révélant une stabilisation de l'activité M&A malgré des défis persistants. Les évaluations moyennes M&A du marché intermédiaire ont chuté à 9,4x EV/EBITDA en 2024, contre 9,6x en 2023 et 9,9x en 2022.

Plusieurs secteurs ont montré une résilience avec des multiples d'achat EBITDA améliorés, notamment l'Agriculture, les Services aux Entreprises, la Consommation, l'Énergie, la Technologie et les Services Financiers, la Santé et la Technologie Industrielle. La part des transactions conclues à 10,0x EBITDA ou plus a augmenté de 56,3% en 2024.

Les tendances notables incluent :

  • La valeur d'entreprise moyenne des cibles a augmenté à 166,8 millions de dollars en 2024, contre 112,5 millions de dollars en 2023
  • Les marges brutes se sont améliorées à 41,3% contre 32,3% en 2023
  • Le ratio de couverture des intérêts a augmenté à 4,3x contre 3,7x en 2023
  • Les acquisitions de plateformes de capital-investissement ont augmenté de 4,7% d'une année sur l'autre en 2024

Capstone Partners hat seinen M&A-Bewertungsindex für den Mittelstand 2024 veröffentlicht, der eine Stabilisierung der M&A-Aktivitäten trotz anhaltender Herausforderungen zeigt. Die durchschnittlichen M&A-Bewertungen im Mittelstand sind 2024 auf 9,4x EV/EBITDA gesunken, nach 9,6x im Jahr 2023 und 9,9x im Jahr 2022.

Mehrere Sektoren zeigten Resilienz mit verbesserten EBITDA-Kaufmultiplikatoren, darunter Landwirtschaft, Unternehmensdienstleistungen, Konsumgüter, Energie, Finanztechnologie und -dienstleistungen, Gesundheitswesen und industrielle Technologie. Der Anteil der Abschlüsse, die bei 10,0x EBITDA oder höher abgeschlossen wurden, stieg 2024 um 56,3%.

Bemerkenswerte Trends sind:

  • Der durchschnittliche Unternehmenswert der Zielunternehmen stieg 2024 auf 166,8 Millionen USD, von 112,5 Millionen USD im Jahr 2023
  • Die Bruttomargen verbesserten sich von 32,3% auf 41,3% im Jahr 2023
  • Das Zinsdeckungsverhältnis stieg von 3,7x auf 4,3x im Jahr 2023
  • Die Übernahmen von Private-Equity-Plattformen wuchsen 2024 um 4,7% im Jahresvergleich

Positive
  • Average enterprise value of targets increased 48% to $166.8M
  • Gross margins improved significantly to 41.3% from 32.3%
  • Interest coverage ratio strengthened to 4.3x from 3.7x
  • Private equity platform acquisitions grew 4.7% YOY
  • High-value deals (10.0x EBITDA or higher) increased 56.3%
Negative
  • Average M&A valuations declined to 9.4x EV/EBITDA from 9.6x
  • Median EBITDA multiple dropped for fifth consecutive year
  • Interest coverage ratio remains below 2022's median of 5.8x
  • High financing costs continue to constrain dealmaking
  • 59.2% of middle market business owners challenged by high interest rates

BOSTON, April 3, 2025 /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, released its 2024 Middle Market M&A Valuations Index, reporting that middle market M&A activity in 2024 showed signs of stabilization after facing valuation pressure in 2023. While equity markets largely shrugged off the rapid interest rate hikes last year, dealmaking remained constrained by high financing costs, uncertain cash flow projections, and a cautious private equity buyer pool. As a result, average middle market M&A valuations declined to 9.4x EV/EBITDA in 2024, compared to 9.6x in 2023 and 9.9x in 2022. The median EBITDA multiple also dropped for the fifth consecutive year, reflecting a continued narrowing pool of competitive bids. Despite this challenging valuation environment, several industries demonstrated resilience. Agriculture, Business Services, Consumer, Energy, Financial Technology & Services, Healthcare, and Industrial Technology sectors saw year-over-year (YOY) improvements in average EBITDA purchase multiples, suggesting selective strength in certain sectors.

Buyers remained highly selective in 2024, with high-quality assets, particularly in services-focused areas, still drew strong competition. The share of 2024 deals closing at 10.0x EBITDA or higher rebounded, rising 56.3% after a steep decline from 2022 to 2023 (-181.3%). Businesses providing essential or specialized services—ranging from healthcare to financial technology—served as hot-spots, attracting strong buyer interest. This was evident in both specialized technical and professional services. Concurrently, deal sizes trended higher, as the average enterprise value of targets increased from $112.5 million in 2023 to $166.8 million in 2024, with further expansion poised for 2025. Deal size dispersion widened across lower middle market ($10-$100 million), core middle market ($100-$250 million), and upper middle market ($250-$500 million) transactions. Lower middle market deals accounted for 40% of transactions with disclosed enterprise values, while upper middle market deals followed closely at 36%. This was a sharp shift from 2023, when just 6.3% of deals were in the upper middle market and 56.3% were in the lower middle market indicating that buyers, seeing improving economic conditions, have shifted their focus from smaller, easily digestible acquisitions to larger, synergistic ones. Despite this, companies remain under significant cost pressure. Proposed tariffs are beginning to take effect, and with inflation persisting, the Federal Reserve has held interest rates steady, further constraining financing costs.

The U.S. has endured a structurally higher interest rate environment since 2020 to combat elevated inflation, which challenged more than half (59.2%) of middle market business owners surveyed in 2024. While the Federal Reserve's 100 basis point interest rate cuts in the final four months of 2024 will likely provide some relief on borrowing costs, business owners may not see the direct impacts until further cuts are implemented. In 2024, the average gross margin among sold middle market businesses rose to 41.3%, compared to 32.3% in 2023. Heightened interest rates persisted as the cost of servicing debt, or refinancing debt, remained high, with companies demonstrating lower YOY average net debt ratios (0.4x net debt/EBITDA in 2024 versus 1.8x in 2023). The deterioration of operating income to cover interest expense witnessed in 2023 began to rebound in 2024 as middle market targets fortified balance sheets with the interest coverage ratio rising from 3.7x in 2023 to 4.3x EBIT/Interest Expense in 2024 but remained below 2022's median of 5.8x.

We are in the third year of an abnormally long M&A downcycle for private businesses, with market corrections generally lasting 12 to 24 months. This indicates that the market is overdue for a rebound in activity. Capstone has tracked several datasets that indicate the market is turning–including a reentrance of private equity platform acquisitions, which rose 4.7% YOY in 2024 and marked the first uptick since 2021. The M&A market will inevitably bounce back, and the improving macroeconomic environment paired with increasing pressure for private equity to deploy investor capital may be the catalysts needed to drive increased deal flow.

Also included in this report:

  • A breakdown of average middle market M&A valuations by industry.
  • Discussion of middle market M&A transaction volume on an industry level.
  • Commentary on the operating performance of target companies sold in 2024 compared to prior years.

To access to full report, click here.

ABOUT CAPSTONE PARTNERS

For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle.  Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services.  Headquartered in Boston, the firm has 175+ professionals in multiple offices across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams.  Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ:HBAN).  For more information, visit www.capstonepartners.com.

Cision View original content:https://www.prnewswire.com/news-releases/capstone-partners-reports--middle-market-ma-valuations-ease-market-players-retain-confidence-in-a-turnaround-in-2025-302420119.html

SOURCE Capstone Partners

FAQ

What were the average middle market M&A valuations in 2024 compared to previous years?

Average middle market M&A valuations declined to 9.4x EV/EBITDA in 2024, compared to 9.6x in 2023 and 9.9x in 2022.

Which industries showed improvement in M&A valuations during 2024?

Agriculture, Business Services, Consumer, Energy, Financial Technology & Services, Healthcare, and Industrial Technology sectors saw year-over-year improvements in average EBITDA purchase multiples.

How did deal sizes change in the middle market during 2024?

Average enterprise value of targets increased from $112.5 million in 2023 to $166.8 million in 2024, with lower middle market deals accounting for 40% and upper middle market deals at 36%.

What were the key financial performance metrics for middle market companies in 2024?

Average gross margins rose to 41.3% (from 32.3% in 2023), interest coverage ratio improved to 4.3x (from 3.7x), and average net debt ratios decreased to 0.4x (from 1.8x).

How did private equity platform acquisitions perform in 2024?

Private equity platform acquisitions increased by 4.7% year-over-year in 2024, marking the first uptick since 2021.
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