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Eagerly anticipated UK200Group SME Valuation Index indicates ""buoyant"" M&A market

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The UK200Group of chartered accountants and lawyers have published a comprehensive SME Valuation Index compiled by members of the group's Corporate Finance Panel.

The popular index, published at the UK200Group Annual Conference in Cardiff today (14 November), is the result of members of the group providing key data on actual transactions involving the purchase or sale of real UK businesses in the form of asset or share deals.

Two top-10 accountancy firms have already requested the index for their own use in the SME sector.

Of benefit to corporate financiers, forensic accountants, insolvency practitioners, investors, banks, tax planners and clients, the survey reveals a marked improvement in the corporate finance market over the past two years.

The standout statistic is the dramatic rise in EBITDA multiples, which are occurring (at a confidence level of 95%) in the range 4.4 to 5.8, a marked increase from the 2012 range of 3.6 to 5.4.

P/E multiples are ranging, at a confidence level of 95%, between 6.3 and 8.3, which demonstrates a contracting towards the upper end of the 2012 range of 5.1 to 8.5.

Overall the average deal size rose from £2.2million in November 2012 to £4.4million in 2014.

Full data is as follows:

 



































 Median P/EMedian EBITDAMean P/EMean EBITDAAverage Deal Six (£m)
November 14

 
6.54.57.35.14.4
Nov 12

 
6.13.66.44.52.2
Nov 115.23.46.84.62.7

Commenting on the updated index, Daniel Shear, Senior Corporate Finance Partner at Berg Kaprow Lewis and a member UK200Group Corporate Finance Panel, who put together the index, said: "The market for corporate finance deals has continued to improve in the past two years, and the UK200Group Corporate Finance Panel members are enjoying a more buoyant period for mergers and acquisitions. The expectation for the next year remains positive.

"It is no surprise to us that the SME Valuation Index records an increase in the multiples being paid for the average SME business. The banking appetite in this sector has improved somewhat over the past couple of years which supports higher multiples that vendors are demanding and buyers are prepared to pay.

"The rise in EBITDA multiples suggests that more SME deals are determined on a EBITDA basis rather than a P/E basis. Interestingly the mean P/E value has increased by a much larger proportion than the median range, suggesting that a few deals attracted much larger P/E multiples."

The UK200Group is the leading mutual professional association in the UK with some 150 offices of quality-assured member accountancy and lawyer firms throughout the UK totalling over 550 partners,150,000 business clients and global links in over 50 countries

The Corporate Finance Panel consists of 14 independent specialists from UK200Group member firms who provide lead advisory and transaction support services for corporate finance work in the owner-managed and SME business sector.

The SME Valuation Index is available to download from www.uk200group.co.uk

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