Consumer

Advisers who understand your sector

Large consumer companies continue to look at acquisitions as a source of innovation and to access brands which appeal to younger more dynamic audiences. Increasingly their focus is on acquiring mission-led consumer brands with a focus on a quality/premium offering, aspriation-led product purchasing, health and lifestyle, millennials, sustainability and transparency. They are prepared to take risks to provide quicker routes to market and higher growth.

How much are companies worth in the Consumer sector?

The following 3 graphs will give private business owners a broad indication of the value of their business:

1. The Enterprise Value to EBITDA* multiples on which comparable listed companies are trading
Consumer graph 1 - reversed-2

At the end of H1 2019, the global, all market average Enterprise Value to EBITDA* multiple for listed consumer companies was 16.6x. This was greater than the previous six months and up on the previous year, when listed consumer companies were trading on a multiple of 15.7x. Within the consumer sector, trading multiples varied between 14.5x and 18.7x across the range of sub-sectors. Smaller businesses generally traded on lower multiples.

* EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation
† Note, the Enterprise Value to EBITDA multiples above are for listed businesses, and it is generally the case that privately owned businesses are valued at a discount. Listed company data was accurate at 01/07/19

2. The multiple of EBITDA paid by acquirers of comparable businesses

Consumer graph 2 - reversed v2-1

The average multiple of EBITDA paid globally in consumer transactions has declined slightly over the past few years. It currently stands at 11.0x. When reviewing these multiples we break out businesses in the range $5-150m, as they tend to have unique attributes which affect their valuation. Smaller businesses have generally been sold on lower multiples.

3. The volume of M&A transactions and acquisitions

Consumer graph 3 reversed-1

In H1 2019, there were 2,576 transactions globally in the consumer sector. This is slightly up on the preceding 6 months, when there were 2,493 transactions. Although slightly declining since 2016 H2, the high number in the last 6 months suggests demand for consumer businesses remains fairly buoyant.

For further information as to how these valuations and statistics are computed, and their impact on your transaction, please contact us.