Around this time last year - shortly after the announcement of the intelligent lockdown - the SME takeover market stagnated. This resulted in some high-profile rulings in summary proceedings, such as Corendon demanding Sunweb's cooperation in its acquisition of Corendon Holding. In most processes that were not yet at an (advanced) stage, parties mostly applied the brakes. But the signs in late 2020 - early 2021 are promising: the takeover market is recovering fast.
Although the corona crisis cannot be unequivocally identified as the cause of declining M&A activity, the second quarter of 2020 showed a significant decline in deals of almost 21% (660 deals) compared to the first quarter of the same year. Compared to the second quarter of 2019, not even half of that number of transactions were realised in 2020*. This marked a clear dip in the merger and acquisition market in mid-2020, especially in SMEs.
But there was also reason to rejoice. The third quarter of 2020 showed a decent recovery. By the end of 2020, this meant that that year still saw almost the same number of transactions as in 2019. That upturn was also reflected in sales prices; where in the first half of 2020 the EBITDA multiple for an SME was 4.7 times EBITDA (gross profit) - the lowest level since 2016 - the paid multiple was already picking up to 4.85 times EBITDA in the second half of 2020. By comparison, in the second half of 2019, that multiple stood at 4.95**.
The mergers and acquisitions market is thus provisionally on course for recovery in 2021. This means that buyers or investors may now have a good moment to acquire (a stake in) a company. Sellers are also getting more prospects of nice returns again, although obviously the differences by industry are still large, given the partial lockdown.
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