Q4 2024 Private Company Market Update: EBITDA Multiples Rebound While Margins Decline
- Ernest Bednarz
- Mar 17
- 3 min read
Did you miss our Q3 2024 Market Update? Check it out here!
As we close out 2024 and move into 2025, private company transactions reveal a mix of resilience and volatility, with EBITDA multiples increasing in the final quarter of 2024 while profit margins show signs of compression.
EBITDA Multiples Show Signs of Recovery
After experiencing a peak of 4.8x EBITDA in Q2 2024, median selling price-to-EBITDA multiples saw a decline in Q3 2024 to 3.2x before rebounding slightly to 3.5x in Q4 2024. This suggests that while deal valuations softened mid-year, buyers maintained confidence in private company earnings potential heading into the new year.
EBITDA Margins Decline, Signaling Profitability Pressures
Despite rising transaction values, EBITDA margins slipped from 18% in Q3 2024 to 16% in Q4 2024. This marks a shift after several quarters of margin expansion and may indicate increasing operational costs or tightening market conditions for private businesses.
Key Trends:
EBITDA margins peaked at 18% in Q1 2022, Q1 2023, and Q3 2024.
Margins remained above 11% since 2018, but the recent drop raises concerns about profitability heading into 2025.
Sector-Specific Valuation Multiples
Valuation multiples continue to vary significantly by industry:
Highest Multiples: The Information sector leads with an all-time median EBITDA multiple of 10.9x, with the last 12 months reaching an astounding 34.9x due to some outsize transactions in this sector.
Lowest Multiples: The Accommodation and Food Services sector continues to lag at 2.5x, followed by the Other Services sector at 3.1x. This sector has remained under pressure since the pandemic.
Overall Market: The median EBITDA multiple across all industries remains at 4.1x.
Market Update: Ten-Year Trend for Private-Seller Sector Multiples
A look into Exhibit 10 reveals sector-specific trends in EBITDA multiples:
The Real Estate, Rental, and Leasing sector saw a significant rise, increasing by 62% over the last year.
The Finance and Insurance sector experienced a 46% increase, indicating strong valuation growth.
Manufacturing and Wholesale Trade sectors continue to stabilize, showing steady median multiples across the year.
These fluctuations highlight how industry-specific factors, market conditions, and investor sentiment shape transaction valuations across different sectors.
Looking Forward
As we progress into 2025, private company transactions continue to reflect dynamic market conditions. While EBITDA multiples are recovering, the decline in margins suggests businesses may face profitability challenges in the coming quarters. Investors and business owners should remain mindful of industry-specific trends, cost pressures, and potential shifts as they navigate the evolving private company M&A landscape.
Data source: DealStats Value Index (Q1 2025) - 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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Malahat Valuation Group specializes in business valuation and real estate appraisals to owners of privately owned companies and their professional advisors.
When owners need to leverage, sell or reorganize their assets, we answer the age-old question "What is it worth?".
We provide our clients and their advisors peace of mind by preparing professional valuations that stand up to scrutiny from lenders, the Courts, and the Canada Revenue Agency.
Malahat Valuation Group Inc.
(250) 929-2929
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