Middle-market valuations peaked in 2016, according to a February report from GF Data. Deal volumes increased in the fourth quarter after a stagnant third quarter.
For the first time in over 13 years, valuations peaked at the average 6.9 times trailing 12-month income for deals valued between $10 million and 250 million. Andrew Greenberg, the CEO of GF Data, said that he is unsure how long the market can maintain this crest or if markets have peaked. Distribution and other business service companies also saw highs in their 2016 valuations and revenues. EBITDA margins were adjusted and the completed deal volume for 2016 was 209, which is down from 2015, GF Data said.
GF Data collects and publishes middle-market external data provided confidentially by private equity groups to subscribers and data providers. There are over 200 private equity firms and financial sponsors that actively contribute data.