Financial Services

Our financial services sector team combines a broad range of experience across the insurance, life and pensions, banking and wealth management industries.

Members of our advisory team have worked in an operational, management or advisory capacity for a wide variety of companies in the sector, including:

1. The Enterprise Value to EBITDA* multiples on which comparable listed companies are trading

At the end of H1 2021, the global, all market average Enterprise Value to EBITDA multiple for listed Financial Services companies was 16.1x.† This was a decrease on the previous six months, when listed Financial Services companies were trading on a multiple of 17.5x. Within the Financial Services sector, trading multiples varied between 14.6x and 21.4x 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. By comparison privately owned businesses are generally valued at a discount. Listed company data was accurate at 05/07/2021.

The average multiple† of EBITDA* paid globally in Financial Services transactions has reduced over the past six months. It currently stands at 8.9x. Despite the recent slight downturn, this multiple is significantly above that seen in H1 2020, emphasising the recovery in valuations seen since this period.

When reviewing these multiples we break out businesses in the range $5-150m, as they tend to have unique attributes which affect their valuation. The multiple for these lower mid-market transactions over the past six months, at 10.0x, is much higher than it was in H2 2020. This quick rebound in valuations signals the improvement in outlook for lower mid-market businesses over the past six months. 
* EBITDA is Earnings Before Interest, Tax, Depreciation and Amortisation
†Note, the transaction multiples above are calculated from raw historic data. This typically understates profits and therefore valuations actually achieved are generally at lower multiples of “normalised” profits.

In H1 2021, there were 1,766 transactions globally in the Financial Services sector. This is a slight increase on the preceding six months, when there were 1,518 transactions. This is the highest number of transactions since H2 2017, demonstrating the current strong demand for Financial Services businesses.

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