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Assessing The PE Deal-Making Environment: EV/Revenue Multiples Surge

Assessing The PE Deal-Making Environment: EV/Revenue Multiples Surge by PitchBook

Introduction

Many core fundamentals of the PE deal-making environment have remained unchanged for some time now. High valuations have persisted throughout the year, remaining a primary concern for buyers. Even if volatility in public markets has led to ripples of uncertainty and a decrease in public stocks, how much that will relieve private asset prices still remains to be seen. As regulations tighten, median debt usage remains low, however, even given the size of price tags. That speaks to the level of scrutiny concerning leverage multiples PE firms and lenders remain under, with memories of the financial crisis still potent. It’s worth pointing out that equity proportions have been declining for several quarters now, due in part to sustained high prices. Already having dialed back activity by count in 2Q, general partners are wary of putting too much capital to work chasing inflated valuations.

Potentially depressed returns aren’t the only cause for concern on the buy side; to look at the broader scene, commodity prices remain depressed and global trade volume is down. The strength of the dollar also has sparked worry, especially among PE firms looking to expand larger holdings globally.

To provide a clear overview of the complex PE deal-making environment nowadays, we’ve not only delved deep into the PitchBook Platform for deal metrics, but also surveyed dozens of investment professionals worldwide for their takes. This edition of our PE Deal Multiples & Trends Report includes more responses than ever before, building substantially on our historical survey data. Combined with our proprietary data, our respondents help shed light on many of these issues. What are PE buyers anticipating in terms of revenue? How healthy are the metrics of the companies PE firms are...


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