Contrary to what is still widely believed, the latest Argos Index® mid-market report once again shows higher average valuations for corporate acquisitions completed by financial investors compared to strategic investors.
The growing importance of private equity in the SME sector is evident not only in higher valuations but also in the increasing professionalism of many transactions. Today, entrepreneurs place greater emphasis on finding partners who not only provide financial resources but also understand and respect the company’s culture, identity, and long-term goals. This aspect plays a particularly central role for family-run businesses.
This is, in many respects, very good news for small and medium-sized business owners in the lower and middle market segments who are considering realizing the value of their life’s work or that of their family.
- First of all, the now apparent trend of rising valuations is likely to continue in light of current developments in the capital markets.
- In addition to the necessary financial resources, financial investors typically also have proven management capabilities that enable them to actively support the company’s continued successful development following an acquisition.
- In addition, for many medium-sized target companies, this offers a promising prospect of continuing to operate as a separate business unit rather than being integrated into centralized corporate structures—with all the associated benefits in terms of corporate identity, agility, job security, and so on.
- Last but not least, private equity firms in this segment are also generally managed in a very entrepreneurial manner, so there is a solid common ground when it comes to management culture.
Please feel free to contact us at any time if you’d like to discuss the opportunities offered by private equity—with no obligation—or if you’ve already given this some serious thought.
You can find the latest Argos Index® for the third quarter of 2024 for unlisted medium-sized companies in the Eurozone here.
