Size premium driving middle market M&A activity

BVWireIssue #107-5
August 31, 2011

Data published in GF Data’s Second Quarter 2011 Report reveal unprecedented differentials in the valuations and debt multiples between small and large transactions, according to a recent GF Data press release. The gap “indicates the resurgence of an even more severely bifurcated market that is less accommodating to smaller transactions,” the GF Data sources add. “The size premium also extends to, and to some extent is caused by, disparities in debt availability to larger and smaller businesses," says B. Graeme Frazier IV, Principal and Co-Founder of GF Data. "While this is not apparent in the overall data, when you look at Total Debt/EBITDA multiples for deals in the $10-25 million TEV range, they are on par with 2010 levels in the high two’s, [and] yet for larger deals, Total Debt/EBITDA went from an average of 2.8x in 2010 to 3.9x in the first half of 2011."
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