Apparently a good pandemic cannot slow the aspirations of investment bankers with liquidity to spare, and the Q1 2021 Argos Index, released last Friday, offers new record-setting evidence.

The Argos Index, created by Epsilon Research (Paris), measures the level of private midmarket company valuations in the eurozone each quarter, has been released. Acquisition prices of unlisted European SMEs reached a new high of 11.3x EBITDA, surpassing the record-setting average of 11, for the last quarter of 2020. Investment funds led the inflation. “They reached a new record high of 12.7x EBITDA, following the record set in the previous quarter and widening the spread with multiples paid by strategic buyers, which stood at 10.8x EBITDA,” Epsilon reports.

Investment value and willing buyer/willing seller values have little in common, except, of course, for the fact that owners of small and medium enterprises see multiples such as 11.3 times EBITDA and assume their valuations should achieve similar lofty results. Every business valuer has faced the difficult task of explaining a 4.0x result to an owner who expected 10x. It’s unpleasant expectation management.

Carried out since 2006 by Epsilon Research for Argos Soditic, the index is calculated based on the information contained in the “Epsilon Multiple Analysis Tool” (EMAT), the database of European acquisition multiples and deal analysis reports with deal values between €1 million and €500 million.

BVWire—UK readers may click here to download the complete study.