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Private Deal Update: Multiples Rising in Midmarket

For Immediate Release August 22, 2013

Naples, FL – Merger and acquisition values and activity are heating up.

That is the analysis from the recently released report on business transactions.

The third quarter Private Deal Update by Pratt’s Stats show that transactions of companies in the $1-5M range are now selling for 4.38 times their cash flow (EBIT) versus a 3.78 multiple last year. These companies also are selling for 48% of net sales versus 38% last year. Pratt’s Stats database of private company acquisitions provides general trend information on valuation multiples and profit margins for transactions in the M&A (mergers and acquisitions) database. M&A advisors can use the information to conduct comparative analysis to help determine the value for owners trying to sell their companies.

Ed Towers, President of Tiger Brokerage Group, says “The manufacturing sector has the highest multiple of cash flow 2013 to date. The wholesale trade sector has risen the most this year. The multiple that wholesalers are selling for now is 4.40 while it was only 3.48 a year ago.” Tiger Brokerage Group is an M&A advisory firm headquartered in Naples.

“Clearly M&A action is heating up”, Towers reports. There are 13,769 transactions in Pratt’s Stats database of privately held companies. In recent years, companies with sales over $5M tended to have the largest multiples.