Above average performers (defined as greater than 10% revenue growth and greater than 10% EBITDA margin) accounted for over half of all M&A transactions in 2010. In addition, these above-average companies were awarded healthy valuation premiums. This is a clear “flight to quality” that is driving up valuation multiples on the best companies available in a market with limited sellers. We have seen an improving trend in market M&A activity during the past 4 quarters and see that trend continuing well into 2011. You can read about what defines an “above average performer” and which industries have experienced an uptick in activity in the March issue of CFA’s Middle Market Pulse.
Posted by John Hammett.