Fortune, 24-Jan-13
By Dan Primack
Leverage multiples on the rise.
Leveraged buyout debt multiples are on the rise, according to S&P Leveraged Commentary & Data.
LCD breaks its numbers out by company size, with "large" being anything with more than $50 million in EBITDA. And, for those deals, leverage multiples rose to 5.3x in 2012. This includes a 5.5x mark for Q4 2012, and represents the fourth straight annual increase since a 4x nadir in 2009. The all-time high mark was 6.2x in 2007, while the 5.3x figure matches what LCD saw in 2005.
For "small" companies of $50 million of less in EBITDA, the LBO debt multiple hit 4.5x in 2012. This included a 5x figure in Q4, and compared to 4.3x in 2011
Overall purchase price multiples for all LBOs fell to 7.9x in 2012, which is the second-lowest mark in the past six years (2009 being the outlier).
Large LBO purchase price multiples fell from 9.1x in 2011 to 8.9x in 2011, although they hit 9.2x in Q4 2012. Similar story in the smaller market, with an 8.9 figure for all of 2012 -- compared to 9.1x in 2011 and 9.2x in Q4 2012.
