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EBITDA Multipliers used for Successful Acquisitions: July 2024

General


As of 08 July 2024, the average EBITDA multipliers used for the acquisition of IT and cybersecurity firms in the UK and EU are as follows:


Cybersecurity Acquisitions.


  1. Cybersecurity Firms: The average EBITDA multiple for cybersecurity companies has experienced fluctuations over recent years. Currently, the average multiple is approximately 8.5x EBITDA, down from 9.9x in 2022. This reflects a shift towards a more selective acquisition environment, emphasizing companies with strong growth and profitability​ (Source 1: Capstone Partners)​​ (Source 2: First Page Sage)​. EAG is using 8.5% for its estimated acquisition costs


IT Services (not hardware)


  1. IT Services Firms: For IT services companies, the EBITDA multiples vary based on company size and sector specifics. Generally, the multiples for IT services firms range between 8x to 12x EBITDA. Cybersecurity firms within the IT sector can command higher multiples, often between 9.1x and 12.7x depending on their EBITDA range and growth potential​ (Source 1: Finerva)​​ (Source 2:First Page Sage)​. EAG is using 10.9% for its estimated acquisition costs as our Targets are small-midsized, with the larger firms typically commanding a higher multiplier.


Summary


These multiples reflect the broader market conditions and investor sentiment towards profitability and sustainable growth in the tech sector. It's crucial for companies seeking acquisition to demonstrate strong financial performance and a clear path to profitability to achieve higher valuation multiples.


Further Information


For further details on valuation multiples, EAG can refer to the sources:



Multipliers used for Successful Acquisitions: July 2024
EAG EBITDA Multiplier Formula

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