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09/02/2022

SMEs: How to stand out in the M&A market

PME et ETI sur le marché des fusions-acquisitions

2021 has been a particularly dynamic year for the M&A market. However, not every company is on an equal footing. Very large companies are over-represented. They alone accounted for the largest share of transactions in Europe during the year. What about the mid-market? Are small and medium-sized companies (SMEs and ETIs) missing out on M&A deals? Experts at AURIS Finance explain.

Some analysts talk about a two-tier mergers and acquisitions market in 2021. On the one hand, there are large companies that are highly coveted by competitors and private equity funds. And on the other, small and medium-sized companies, whose market remains more discreet.

Major transactions take centre stage

In France, acquisitions by French companies amounted to €213 billion in 2021, according to data provided by Refinitiv. This figure is largely driven by massive deals such as Bouygues’ €7 billion takeover of Equans and Veolia’s acquisition of Suez. These two transactions, which were particularly spectacular in terms of the sums invested and the number of employees involved, made all the headlines.

A host of more discreet transactions

Deals involving smaller companies, on the other hand, remained more discreet. In 2021, for example, the agri-food sector recorded 143 acquisitions or disposals involving French companies. The market thus remains very dynamic, driven in particular by companies seeking synergies through the acquisition of a competitor, as in the case of the Breton giant Le Duff, which has entered into exclusive negotiations to acquire the European leader in frozen products, Frial.

Falling valuations

Another important observation is the decline in valuation levels. While the big transactions in the news may surprise on account of their valuation levels, what about smaller structures? According to a study by Argos Wityu, their valuations fell to an average of 11 times EBITDA in Q3 2021, down from 11.6 times a year earlier. Very high valuations are often reserved for companies with disruptive technologies in high-growth sectors, such as tech start-ups. More traditional companies therefore appear to have escaped the rise in value.

Small and medium-sized businesses: get the support you need

Any company sale requires some strategic thinking beforehand. This involves listing all the company’s assets, strengths and weaknesses. It is also possible to make adjustments in preparation for a sale. This could involve, for example, optimising internal processes or managing the customer file. This evaluation process can then be used to draw up an inventory of potential buyers. AURIS Finance’s experts will be at your side throughout the entire project. We can assist you at any stage of your project, taking into account the specific challenges connected to the size of your company and your industry.

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