Political uncertainty has had little impact on SME M&A valuations


The 2019 study of SME valuations (with an average deal value of £5 million in 2019) indicated that Brexit and an uncertain political and economic landscape had little impact on multiples being paid for the UK’s smaller businesses in 2019.

The average EBITDA multiple paid was 6.1x versus 6.0x in 2018 (using October as the cut-off in each year).

Factors believed to be counteracting the negative impacts of political and economic uncertainty are believed to include: the low cost and plentiful supply of capital (both debt and equity); cheap Sterling, making UK businesses more attractive to overseas buyers; and an opportunity to take advantage of what is, for now, an advantageous tax regime for selling entrepreneurs.

MarktoMarket, the provider of data and search capabilities on UK private companies, and UK200Group, the UK’s leading quality assured membership association of independent accountants and lawyers, today announces its collaboration on the 2019 UK SME Valuation Index, a leading barometer of private company valuations.

In order to provide deeper insights into valuation trends, MarktoMarket will also be releasing a series of private market indices, providing analysis of deal multiples in specific sectors and size bands.  These indices are compiled using MarktoMarket’s proprietary data, which is gathered through a combination of machine learning and in-house data analysts, combined with data submitted by its customers, which include some of the UK’s leading M&A advisers and private equity investors.  Indices have long been a reference point for trends across markets but have been largely absent as a barometer for private company valuations due to the difficulty in securing timely data. MarktoMarket’s data gathering processes and customer collaborations overcome this issue, allowing hitherto unavailable insight into valuation trends across deal-size ranges and sectors.

MarktoMarket has a strong relationship with Price Bailey, a UK200Group member and, specifically, Simon Blake, Head of Strategic Corporate Finance at Price Bailey and Chairman of UK200Group’s Corporate Finance Panel.  As well as Price Bailey, UK200Group members Armstrong Watson, Dains, Smailes Goldie, Cowgills, Knill James, Griffin Chapman and Roffe Swayne all use MarktoMarket data for private company analysis.

Simon Blake, Head of Strategic Corporate Finance at Price Bailey and Chairman of the Corporate Finance Panel at UK200Group, said: “We have been using the MarktoMarket data platform at Price Bailey for over a year and it quickly became apparent that they are the best positioned data specialist to generate valuable analysis from the collection and aggregation of M&A data from multiple sources.”

Declan Swan, CEO of UK200Group, said: “Our members have been requesting deeper insights into UK company valuation trends for some time.  With their expertise in understanding private market data, it was a pleasure to work with MarktoMarket on the 2019 Index.”

Doug Lawson, CEO and Co-founder of MarktoMarket, said: “We were thrilled to work with UK200Group on the 2019 Index.  The UK200Group is a trusted provider of private company valuation insights and we hope that our new collection of sector and size-based indices, will be useful to its members.”