November 6, 2017

Survey of middle market private equity executives finds optimism in portfolio growth

Since 2012, the team at CBIZ CMF has surveyed executives at ACG’s annual M&A East Conference to get a true pulse on the private equity industry. This year’s Philadelphia-based conference took place on Oct. 3 and 4 and saw approximately 1,300 middle-market dealmakers attend. As in years past, we saw an opportunity to take the temperature of the industry by surveying the attendees.

The overarching theme from this year’s survey results was clear – the industry’s trajectory is expected to continue to push upward. Executives forecast continued increases in valuations as well as organic sales growth within existing portfolios.

In fact, 60.7 percent of respondents expect between 5 to 10 percent increases in organic revenue for middle-market private equity-backed portfolio companies over the next 12 months. In 2016, 34.2 percent of respondents expected 5 to 10 percent growth.

Those surveyed also reported that purchase multiples have remained steady, with 25 percent of respondents reporting EBITDA multiples of 9x or more as of this fall, which is in line with 2016 results. Anecdotally, many groups indicated the 2018 survey should add new categories above 9x into the double digits.

Check out the charts below to see how this year’s results compare to prior years.

1. Based on what you are negotiating today or have closed in the last quarter, where are average multiples as a factor of EBITDA?

2. Based on what you are negotiating today or have closed in the last quarter, on average, how long is it taking or expected to take from first meeting with management to closing a deal?

3. Taking your entire portfolio as a whole, what is the estimated aggregate revenue growth for the next 12 months, as a percentage over the prior year?

CBIZ CMF is a leading provider of financial, operational and human capital solutions to private equity, middle market and small cap public companies. For more information, please click here.

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