tede02 Posted April 20, 2015 Share Posted April 20, 2015 Interesting little blip in today's WSJ..... http://www.wsj.com/articles/moneybeat-deals-are-getting-dear-1429493348 16.5 The average Ebitda multiple firms are paying to acquire U.S. companies this year, the highest on record. Not only is U.S. deal making surging, so are valuations for U.S. companies. Buyers are paying 16.5 times earnings before interest, taxes, depreciation and amortization, or Ebitda, for companies. That is the highest level since 1995 when Dealogic began tracking the data, according to Dealogic, and easily exceeds the previous high mark of 13.3 times Ebitda recorded last year. Rising U.S. valuations also have lifted the average valuation globally to its highest level on record. The average enterprise value to Ebitda multiple stands at 12.4 world-wide. Enterprise value represents a company’s stock market capitalization minus a company’s cash, plus its outstanding debt. The increase in valuations comes as deal activity is surging. So far this year, buyers of U.S. companies have announced $448 billion worth of acquisitions. World-wide, $1.08 trillion worth of deals have been signed. Both are at their highest levels since 2007. Yet buyers are paying just 25.2% above where the sellers’ shares were trading the week before the deals were announced. That stands as the third-lowest level for a year on record, according to Dealogic. With U.S. stocks hovering near record highs, but having lost some of their momentum, and the Fed looking to raise rates for the first time in nine years, the modest premium suggests sellers aren’t holding out for an even richer payoff. Link to comment Share on other sites More sharing options...
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