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UK200Group reveals the true value of SMEs in 2015

By CreditMan Monday, December 14, 2015

The UK200Group of independent accountants and lawyers have published a comprehensive SME Valuation Index for 2015, compiled by members of the group’s Corporate Finance Panel.

The popular annual index is the result of research by members of the group, which has provided key data on actual transactions involving the purchase or sale of real UK businesses in the form of asset or share deals.

Of benefit to corporate financiers, forensic accountants, insolvency practitioners, investors, banks, tax planners and clients, the survey reveals a marked improvement in the corporate finance market over the last two years.

Statistically, at a 95 per cent confidence level, Earnings Before Interest, Taxes, Depreciation and Amortization multiples are occurring in the range 5.3 to 6.9, which shows a continued increase from the 2014 range of 4.4 to 5.8.

Price-Earnings (P/E) multiples are ranging, at a 95 per cent level of confidence, between 7.8 and 11.5, which demonstrates an expansion at the upper end of the 2014 range of 6.3 to 8.3, as a result of some deals, which were concluded at very full P/E multiples.

Average deal size for the data included in the Index continues to be around the £4 million mark.

Simon Blake, Chairman of the UK200Group Corporate Finance Panel and Corporate Finance Partner at Price Bailey, said: “It is no surprise to us that the UK200Group SME Valuation Index records an increase in the multiples being paid for the average SME business.

“Liquidity in this space has continued to improve and more buyers are coming to the marketplace seeking opportunities.

“Increased multiples have also attracted more sellers into considering a disposal, after a period of perhaps delaying their plans. The combination of more buyers and sellers creates a virtuous circle pushing multiples even higher.”

The UK200Group Corporate Finance Panel consists of independent specialists from member firms who provide lead advisory and transaction support services for corporate finance work in the owner-managed and SME business sector.

The SME Valuation Index is available to download from www.uk200group.co.uk