The Argos Index® decreased slightly to 8.9x EBITDA

The Argos Index® is slightly down in Q1 2024, continuing a 2.5 years decline since its Q2 2021 peak.

In short
• The Argos Index® decreased slightly to 8.9x EBITDA.
• The Argos Index® is driven by the decrease of multiples paid by investment funds.
• Record proportion of transactions below 7x EBITDA.
• M&A activity stable in Q1, after a limited fall in 2022 / 2023.

At 8.9x EBITDA, the Argos Index® by Investment Fund Argos Wityu, is at its lowest level since 2017, close to its 20 years average. See figure below:

The Argos Index® was driven this quarter by the decreasing prices paid by investment funds (down to 9.1x EBITDA), that gradually converge with those paid by strategic buyers (stable at 8.7x EBITDA).

The downward pressure on prices is also highlighted by the drop in multiples on the upper mid-market (down by 4x EBITDA since Q1 2023), that converge with lower mid-market multiples.

The proportion of multiples > 15x EBITDA is stable at 13 percent of the Argos Index® sample but with no deal > 20x, as Tech & Healthcare deals represent only 30 percent of the sample, a record low. Besides, sellers’ prices continue to adjust, with a record proportion of deals < 7x EBITDA.

The M&A mid-market activity is stable this quarter, in line with the low quarterly volume of the last two years, but contrasts with the global M&A market rebound.

As financial conditions are shifting, this apparent stability hides conflicting trends: (i) delayed effects of the adverse 2023 macro-economic conditions, with record high interest-rates, low growth and geopolitical risks, still weight on both activity and prices; (ii) receding uncertainty on rates, as inflation in the euro zone has fallen significantly from its 2022 peak, pushes for a gradual recovery.

In this context, the M&A mid-market has continued to show remarkable resilience, backed by the imperative for PE funds to renew their investment portfolio and corporates to adapt and transform their business models.

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