Q1 2023 Market Update - EBITDA MULTIPLES Reach New Heights in 2022
What a rollercoaster year we've had, the median EBITDA multiple across all industries was highest in the third quarter of 2022, at 5.6x, and there has since been a downward trend through the fourth quarter of 2022 and the first quarter of 2023. To put this into context the average all-time EBITDA multiple is 4.2x as shown below, that's a 33% premium.
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EBITDA Multiples pull back sharply toward the all-time average
In the period analyzed, the median EBITDA multiple across all industries was highest in the third quarter of
2022, at 5.6x, and there has since been a downward trend through the fourth quarter of 2022 and the first
quarter of 2023. The market has pulled back sharply and settled just below the long-term average of 4.2x at 4.0x.
EBITDA Margins are setting records
EBITDA, as a percentage of revenue, hit 25% in the first quarter of 2023 (the highest recorded figure over the
periods analyzed). The previous range was between 11% and 12%, from the first quarter of 2019 through the
fourth quarter of 2022. The lowest EBITDA margin since the first quarter of 2017 was 11%, which was reached
in the second quarter of 2019.
Selling Price to EBITDA by Sector
All-time EBITDA multiples remain the highest for the information sector (11.1x) and the mining, quarrying, and
oil and gas extraction sector (8.2x).
Meanwhile, the lowest all-time EBITDA multiples are in the accommodation and food services (2.6x) and the other services sectors (3.1x). The information sector has shown a notable recent increase, with the last 12-month EBITDA multiple rising to 14.4x when compared with its all-time period multiple of 11.1x.
The median across all industry sectors for all time periods is 4.2x
10 yr Median Selling Price to EBITDA by Sector (Private Companies)
Median multiples paid for private targets, are organized by industry sector. Multiples across the 15 sectors appear to rise and fall based on various factors. Median EBITDA multiples decreased across all sectors as compared to the previous year.
Data source: DealStats Value Index (Q1 2023) - The DealStats Value Index summarizes valuation multiples and profit margins for private companies that were sold over the past several quarters. Business Valuation Resources (BVR) captures this private company transaction data in its DealStats platform.
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