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The first quarter of 2024 has wrapped up, so I wanted to publish the first quarter’s M&A statistics. While capital markets and buyer sentiments were positive, deal volume has yet to reflect this optimism. As you can see below, control transactions under $500MM of enterprise value declined again in the first quarter of 2024 compared to the prior quarter.

Quarterly M&A Activity - US Deals under $500MM

Multiples for Small Deals are Consistent

Despite lower deal volume, data and our experience in the market indicate that, for deals under $100MM of enterprise value, that multiple have remained relatively constant since 2020, fluctuating around the four year average of 6.81X.

With private credit on the rise, private equity firms continue to have the ability to finance good deals, and strategic acquirers continue to have access to capital. Note that, while not shown below, multiples are up slightly in the first quarter of 2024.

Annual M&A EV/EBITA Multiple - US Deals under $100MM

Signs of Volume Increasing in 2024

Again this quarter incoming inquiries are up, and we hear the same from other intermediaries and deal attorneys and accountants. We look forward to a busy 2024, working with business owners to determine the best time to sell.

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Market dynamics in the lower middle market create a potentially optimistic scenario for increase M&A growth. Private equity buyers have dry powder exceeding $2.5 trillion, and strategic buyers, both private and public, are seeking growth through acquisitions. Deals may be tougher to complete, and multiples may be depressed, but there is always appetite for good strategic fit.

Please contact us if you have a question about what your company is worth, or when is a good time to sell.