Economic uncertainty – ranging from an inverted yield curve to a deceleration in US GDP – may have slowed dealflow but has done little to dent entry multiples for sponsors, according to a report from valuation services business Murray Devine.
“There was a pullback in a number of deals that were done, but those multiples have stayed elevated in a higher band” Dan DiDomenico, senior managing director of Murray Devine and author of the report, told Private Funds CFO. “They’re kind of taking a breath here. There was a lot of deals in the last three to four years building up to it, and they’re just holding back right now, taking a breather and picking the deals they want to see get done.
“Perhaps most notably, valuations for PE deals appear to be mostly static, and [have stayed] within an elevated band established over the past few years.
“Even though there’s some volatility in the public market, especially this week, the private equity space seems to be holding pretty steady in the multiples that are being paid and the values for their investments.”