Q1 2024- Market Update: EBITDA Multiples Return to Typical Levels
Since 2018, we’ve seen a downward trend from that high point until the second quarter of 2022. Since then, EBITDA multiples have generally been trending upward, reaching 4.3x in the fourth quarter of 2023.
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EBITDA Multiples Return To Typical Levels in 2023
EBITDA multiples across all industries were highest in the third quarter of 2018 at 5.0x, in the time period analyzed. Since then, there has been a downhill trend until the second quarter of 2022. From that time onward EBITDA multiples have generally been on an upward trend reaching 4.3x in Q4 of 2023.
EBITDA Margins Rise in 2022 and Maintain High Levels in the Third Quarter of 2023
EBITDA margins started to decline in the second quarter of 2022 but have trended negatively since, reaching 15% in Q4 of 2023. Margins were at their highest point in the first quarter of 2023 at 18%. From the first quarter of 2018 through the fourth quarter of 2021, the range was between 11% and 15%, but since Q1 of 2018, EBITDA margins have never been below 11%.
All-Time Median EBITDA Multiple For All Sectors is 4.2x
Multiples remain the highest for the information sector (11.0x) and the utilities sector (8.1x) while the lowest all-time EBITDA multiples are in the accommodation and food services (2.6x) and the other services sectors (3.1x). The information sector, finance, real estate as well as accommodation sectors have all increased above the last 12-month EBITDA multiples as compared to their respective all-time multiples. The accommodation sector which continues to recover from the pandemic ara rose to 3.3x.
Ten-Year Trend For Private-Seller Sector Multiples
Data source: DealStats Value Index (Q1 2024) - The DealStats Value Index summarizes valuation multiples and profit margins for private companies that were sold over the past several quarters. Business Valuation Resources (BVR) captures this private company transaction data in its DealStats platform.
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