Valuations of acquired companies increased despite pandemic


Despite the economic downturn caused by the coronavirus epidemic, average valuations of acquired companies around the world increased last year, according to the latest report by the consulting firm Bain & Company, the Warsaw Business Journal reports. 

Investors had to pay more than a year earlier for companies from the technology, telecommunications, pharmaceutical, and digital media sectors. On the other hand, the valuations of companies from the retail and energy sectors decreased.

The calculations of Bain & Company experts show that in 2020 the average purchase price of the company was 14 times its EBITDA profit. A year earlier, investors paid an average of 13 times the profit. The reason for the persistence of high valuations in many industries is the high supply of capital. This is due to government stimulus packages, long-lasting low-interest rates, an increase in household savings, as well as record-high funds for investments gathered by private equity funds.

"It was a year of great uncertainty and turbulence, but also of great surprises. The increase in the average valuations of the acquired companies in many sectors is certainly a surprise for many market participants," Jacek Poświata, Managing Partner of Bain & Company, said.

Last year did not look good. In the first months of the pandemic, the mergers and acquisitions market actually froze. However, in the second half of 2020, investors returned to the market. As a result, in the third and fourth quarters, the total value of transactions worldwide increased by more than 30%. According to a global survey conducted by Bain & Company among 300 market participants, this positive trend is likely to continue in the coming months – around half of respondents expect increased market activity in 2021.


Hungary Gasoline Prices 3% Over Regional Avg Energy Trade

Hungary Gasoline Prices 3% Over Regional Avg

Gov't Wants Sustainable Business Model for Magyar Posta Government

Gov't Wants Sustainable Business Model for Magyar Posta

120,000 Guest Workers Employed in Hungary HR

120,000 Guest Workers Employed in Hungary

Gastrotourism Alive and Well in Hungary Tourism

Gastrotourism Alive and Well in Hungary


Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.