Murray Devine Private Equity Valuations Report – First Half 2017
Philadelphia, August 16, 2017 – Murray Devine, a leading national valuation advisory firm, today published its inaugural first half Private Equity Valuations Report examining trends in PE deal volume and valuation multiples for the first six months of 2017.
Analyzing data provided by PitchBook, Murray Devine’s report confirms that deal volume and valuations are beginning to diverge with the pace of PE investment activity slowing year over year while valuations have climbed to a 10-year high. This is a tendency more common near the end of a market cycle when sponsors typically target high-quality assets with defensible market positions and lower-quality businesses may fail to trade hands due mismatched buyer and seller expectations.
In the first half of 2017, U.S. private equity deal volume reached $327.9 billion with sponsors closing a total of 1,808 new investments the aggregate number of deals compared against the first half of 2016 decreased more than 15 percent. This decrease contrasts with the ascent of deal valuations which, as a multiple of EBITDA, reached 13.7x in the first six months of 2017. In addition, the data shows the debt markets remain quite fluid for PE buyers with average debt multiples at 7.2x EBITDA in the first half.
“With so much dry powder in the private equity market, against the backdrop of an enthusiastic lending universe, competition for high-quality companies remains high,” said Daniel DiDomenico III, Senior Managing Director at Murray Devine and author of the report. “As expected, valuations were highest in the large market, but the elevated prices in both the small and middle markets underscore that investors are likely relying less on multiple expansion as part of their return calculus today.”
Murray Devine’s First Half 2017 Private Equity Valuations Report, also quantifies the extent to which PE buyers are paying more than their strategic counterparts and highlights the budding investor interest, based on the prices being paid, in the consumer and technology sectors.
“Where valuations go from here remains to be seen,” said Dennis Murray, President and Co-Founder of Murray Devine. “Such elevated entry prices can present certain challenges for private equity buyers but also reflect the confidence of investors in their ability to effect positive change and add material value during their ownership periods.”
About Murray Devine
Murray Devine specializes in valuation and valuation only. Since 1989, Murray Devine has provided valuation services to the most respected private equity and venture capital firms, hedge funds, private debt funds, BDC’s and corporations. To learn more about valuation services provided by Murray Devine or to contact a member of the firm, please visit www.murraydevine.com.