EBITDA Multiples Stay Firm as Premiums Expand

Merger and acquisition pricing based on internal performance measures backed away from a mid-2004 spike later in the year. Multiples of EBITDA slipped to an average of 11.77 in the three months ended November 20, down more than a point from the year’s high of 12.91 in the prior three months – even as deal activity appeared to be getting stronger. The level for late 2004 was virtually even with the March-to-May period of the year and up slightly from the early part of the year, suggesting a long-term trend of firm pricing with an upward tilt. Meanwhile, pricing for public companies continued to climb, as measured by the premium over target stock prices. The premiums for the September-to-November span showed gains since hitting a trough early in the year. The showing indicated a greater demand for public targets, which had the effect of raising m&a prices faster than stock prices. Copyright 2005 Thomson Media Inc. All Rights Reserved. http://www.thomsonmedia.com http://www.majournal.com