The new DealStats Value Index Digest notes a worrisome trend: The average EBITDA margin of deals completed last quarter dropped. With a lower pretax profit number, deal values also fell.

From the second quarter of 2019 through the fourth quarter of 2020, EBITDA margins had seen very little change, coming in at 11% or 12% in each quarter. The move downward to the current 10% (see the table below) in 1Q2021 indicates that the duration of COVID-19 and the economic lockdowns have had a negative impact on small businesses despite the availability of continued government stimulus schemes and cost-control measures. Though DealStats data are primarily sourced from North American transactions, these conclusions can still support UK valuers as they prepare income forecasts that may be more conservative.

BVWire—UK subscribers may download the entire DealStats Value Index Digest for free.