Compass Report--The State of M&A

The mean public company valuation (market capitalization) declined by 25 percent and by a median of 22 percent. With public company valuations much lower on Wall Street, these buyers are unwilling to pay as much for their private company targets. Therefore, valuations have declined approximately 20 percent since 1998. The range of EBITDA multiples for private companies has declined from 4 to 6 times in mid-1998 to 4 to 5 times presently. As always, there are exceptions to these ranges. There are never hard and fast valuation practices; when steely-eyed analysts are calculating, beauty is in the eye of the beholder.