The DealStats Value Index: A Value-Added Proposition

BVR’s DealStats platform is one of the best ways to discover complete financials for public- and private-company transactions. But one aspect that adds substantial value to a DealStats subscription is the DealStats Value Index. This quarterly publication put together by BVR’s dedicated team of financial analysts condenses and analyzes all the latest market trends and correlates them with a massive wealth of historical data to provide a clear and concise market analysis in one essential and comprehensive brief. Get a sneak peek at some of the fourth-quarter 2021 issue’s insights.

4Q 2021 EBITDA MULTIPLES FALL TO 3.9X

Growing concerns over rising inflationary pressures coupled with the spread of the omicron variant weakened the outlook of continued economic growth, resulting in EBITDA multiples falling to 3.9x in the fourth quarter of 2021, the first decrease in two quarters. While a weakened economic outlook dimmed prospects of continued economic growth, the decline in the fourth quarter continued the cyclical trend of a decline in the EBITDA multiple in the fourth quarter, dating back to 2017. Prior to its decline, the EBITDA multiple rose to 5.0x in the third quarter of 2021, the highest multiple since the start of the pandemic.

 4Q2021 NET SALES MULTIPLE AT 0.58X

The net sales multiples over the past two quarters of 2021 defy any trend seen over the illustrated period and likely further back in time. Despite a significant decline in the EBITDA multiple in the fourth quarter of 2021, the net sales multiple, at 0.58x, remained at a historical high. The third-quarter multiple, 0.92x, is likely to change as DealStats continues to collect transaction information from this period. Typically, an increase in the net sales multiple is a reflection of either an increase in the sales prices or a decrease in the net sales figure, but one this high is uncommon. From a historical perspective, in the second quarter of 2020, the net sales multiple plummeted to its lowest level, 0.43x, with the onset of the coronavirus pandemic serving as the culprit. In the subsequent quarters, the net sales multiple followed the plight of the pandemic, rising to 0.45x in the third quarter of 2020 and to 0.48x in the fourth quarter of 2020, with both quarters serving as a point in time when optimism increased at the mention of the U.S. economy reopening or when virus figures appeared optimistic. Through the first two quarters of 2021, when the delta variant emerged and began to spread across the U.S., as well as the early signals of inflationary pressures rising within the U.S. economy, the net sales multiple moved lower, to 0.45x and 0.46x, respectively. While it’s easy to point the finger at the coronavirus pandemic for the decline in the median net sales multiple, the data suggest that a decline in the net sales multiple occurred in 2019. When compared to the period highlighted in the associated graph, from the first quarter of 2016 to the fourth quarter of 2018, the lowest median net sales multiple, 0.48x, was still higher than any of the median net sales multiples from the third quarter of 2019 to the second quarter of 2021. The decline noticeably began in the first quarter of 2019, when the median net sales multiple fell to 0.46x from 0.51x in the fourth quarter of 2018. The trend at the time typically showed that the net sales multiple was at its lowest levels during the first two quarters of each year, but the subsequent quarters, when the median net sales multiple continued to trend lower up to the start of the pandemic, bucked that trend.

The DealStats Value Index is your guide to emerging trends and historical patterns that can add massive value to your valuations. The only way to get it is to subscribe to the DealStats platform. Don’t miss out and learn more about DealStats here!