Mid-market purchase price multiples continued to expand in the third quarter, to 8.9x, according to Standard & Poor’s Leveraged Commentary and Data. Counting fees and expenses, the total expense of doing deals was 9.2x, the data showed.
That was up from the second quarter multiple of 7.9x and the total expense of 8.4x.
At the same time, the equity contributions of mid-market sponsors eased in the third quarter, to 40 percent of the purchase price, from 42 percent in the prior quarter. LCD defines the mid-market as companies generating less than $50 million of EBITDA.
The apparent health of mid-market pricing is somewhat surprising, in light of the credit contraction that began at the end of July and continued through the quarter, largely as a result of the sovereign debt crisis wracking the eurozone. But sponsors and the lenders who work with them say the mid-market is less subject to such market volatility than large-cap deals.
In the large corporate segment, for companies with EBITDA greater than $50 million, the purchase price multiple increased sequentially to 10.1x from 8.8x while the equity contribution climbed to 39 percent from 35 percent.
For all deals in the third quarter, purchase price multiples rose sequentially to 9.7x from 8.5x, and equity contributions rose to 39 percent from 37 percent, LCD reported.