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In private equity transactions under $250 million, EBITDA enterprise valuation multiples increased from 6.7x to 7.0x EBITDA, an increase of 4.5% from last quarter. As the current EBITDA multiples are compared to historics, multiples have rebounded in the $25-$100 million deal range to near two-year averages, as deals from $100-$250 million are lagging pre-pandemic valuations. When comparing EBITDA multiples to the entire dataset, multiples of transactions in the $25-$100 million range are well above the long-term multiples.

In private equity transactions under $250 million, EBITDA enterprise valuation multiples fell to 6.7x from 7.4x EBITDA (-9.5%) last quarter. Total Debt to EBITDA multiples moved up to 3.7x (12%) compared to the previous quarter at 3.3x EBITDA, why and how this happened is worth discussing. Even though debt multiples increased quarter over quarter, senior debt multiples decreased slightly in the quarter by 0.1x while subordinated and mezzanine debt doubled from 0.5x to 1.0x EBITDA (GF Data).

In transactions under $250 million, EBITDA valuation multiples remain unchanged at 7.4x EBITDA, as the average Total Debt to EBITDA ratio decreased from 3.9x to 3.3x in the quarter. With valuation multiples not changing, private equity buyers increased their equity participation to complete deals from 3.5x to 4.1x EBITDA, resulting in equity investment increasing over 56% of the transaction value (GF Data).