Overview of business transfers in Belgium
"The number of transmissions per year in Belgium is not really measured in a structured way. However, thanks to the annual M&A Monitor reports of the Vlerick Business School and the Sowaccess annual report on transmissions in Wallonia, it is possible to get a good overview of the Belgian market," explains Marc Van Damme, partner in the Corporate Finance division of RSM Belgium.
Source: Vlerick M&A Monitor 2020
These studies show that the multiples increased steadily until 2018. Since 2019, however, the increase in multiples has slowed down. In the Netherlands, a comparison shows that in the first half of 2020, multiples fell by around 5%.
The multiples vary enormously depending on the size of the company and the sector in which it operates. For example, companies with a high EBITDA are pharma, healthcare and technology (on average between 8.1 and 9.4). Conversely, multiples in construction, logistics and retail are much lower (between 4.8 and 5.8).
Regardless of the multiples, is now the time to sell your business?
Yes, if the motivation is justified and provided that the company has not suffered, or hardly suffered, from the crisis we are going through. There are companies that continue to perform well, even in times of crisis. In addition, there is a lot of cash available at the moment. Many investors are looking for attractive targets in a period of low interest rates.
They are, of course, calling on banks to finance a large part of their acquisition. But in a third of the cases, the seller is also asked to grant a vendor loan.
What is the impact of the Covid crisis on the sales and takeover market?
Figures already show that fewer transactions will be concluded this year. It is very likely that due diligence will be more thorough, that banks will demand more guarantees and that applications for vendor credit and/or earn-out credit will increase.
Will the acquisition files still attract the attention of future buyers?
"Yes," Marc Van Damme answers. "Given that there are fewer acquisition files on the market, interesting companies with strong financial results will receive much more attention. And in these cases there will not necessarily, as expected, be a fall in prices", he concludes.