European M&A Market Surges in H1-2024

The European M&A mid-market is showing renewed strength in 2024, marking a notable shift in market dynamics, according to the latest European M&A Monitor by Dealsuite. After a period of economic uncertainty caused by high interest rates and inflation, the first half of 2024 has seen a resurgence in mergers and acquisitions activity across Europe.

Average EBITDA Multiple Rebounds

One of the outcomes of the report is the increase in the average EBITDA multiple. After a decline from 5.4 to 5.1 between 2022 and 2023, the multiple remained stable throughout the latter half of 2023. The first half of 2024 noted a rise, with the average EBITDA multiple reaching 5.2. This uptick suggests growing confidence in business valuations, reflecting improved economic conditions and a more favorable investment climate across the continent.

Companies Offered for Sale Earlier

The study also highlights a significant shift in the timing of when businesses are brought to market. A decade ago, it was common for companies to remain under the same ownership for longer periods before being offered for sale. The study shows that businesses are now being offered for sale earlier in their life cycles. According to the report, 55% of advisors report that companies are typically offered for sale between their 10th and 20th year. Additionally, 40% of advisors noted that companies are now being listed for sale earlier than they were 10 years ago. This shift could be attributed to the changing priorities of modern entrepreneurs.

Floyd Plettenberg, CEO of Dealsuite, confirms that these figures reflect a trend, stating, "The new generation of entrepreneurs no longer feels compelled to persevere with the aim of eventually passing the business on to their children. If they can secure a good sale after a few years, they choose that route as a mark of success. Additionally, businesses now often require a different style of management sooner. The seller typically moves on to start something new, invests, or offers their services as a freelancer."

Demand Per Company Increases Amidst Economic Recovery

The report also reveals that demand per company has increased in H1-2024, bouncing back from a dip experienced in H1-2023 due to high interest rates and inflation. This resurgence in demand reflects the improving economic outlook. The number of interested buyers per company rose from an average of 7.8 in H1-2023 to 8.3 in H1-2024, with the sectors Software Development and IT Services seeing the highest levels of interest.

Continued Optimism for H2-2024

Looking ahead, the outlook for the remainder of 2024 remains optimistic. The increase in both buy-side and sell-side transactions, combined with the rising EBITDA multiples and earlier market entry of businesses, suggests that the European M&A mid-market is well-positioned for continued growth. The majority of M&A advisors surveyed expressed optimism about the second half of 2024, with 73% holding positive expectations. This sentiment is particularly strong in the UK and Ireland, where 89% of advisors are optimistic about the market’s prospects.