Strong growth in Belgian mergers and acquisitions market

2015 and the beginning of 2016 were characterised by a pronounced increase in the number of transactions in the Belgian mergers and acquisitions market. Demand is greater than supply, stimulated by easy and cheap access to finance and greater availability of financial resources to investment companies. Furthermore, the persistently low interest rate environment means there is increased interest from family investors, wealthy individuals and foreign private equity funds in Belgian medium-size enterprises. It is therefore not surprising that the prices paid are increasing across all sectors and business sizes.

These are the findings from a survey of 142 Belgian mergers and acquisitions experts into their experiences over the past year. The research was led by Professor Mathieu Luypaert of the Vlerick Centre for Mergers, Acquisitions & Buyouts, in collaboration with Bank J.Van Breda & Co, BDO and Gimv.

Download the full research report '2016 M&A Monitor - Shedding light on M&A in Belgium'

Belgian acquisitions market is booming

The global growth trend is also reflected in the Belgian mergers and acquisitions market.

  • 65% of those surveyed have seen an increase in the number of transactions in Belgium during the past year. Half of them even reported an increase of more than 10%.
  • Demand is exceeding supply – both the banks and investment funds have access to sufficient financial resources, which is strongly stimulating demand.
  • This growth has not yet reached its peak. 52% of those surveyed expect the acquisitions market to grow even further, while only 13% of all experts predict a (slight) decline.

Caution should be exercised, however, according to Professor Mathieu Luypaert: “Transactions that take place at the peak of the mergers and acquisitions market are generally less profitable. They are often prompted by over-confidence and herd behaviour. Typically, the most attractive deals are concluded at the start of a wave of acquisitions, leaving only target companies that do not fully meet the ideal selection criteria.

Drivers: strategic versus financial

What motivators are driving these recent mergers and acquisitions?

For strategic buyers:
1. achieving economies of scale
2. penetrating new geographical markets
3. cross-selling of products or services
4. acquiring new technologies
5. creating improved purchase terms

For financial buyers (investment funds):
1. buy-and-build strategy
2. increasing earnings and profit margin

Mathieu Luypaert: “In contrast to international findings, we see that financial buyers are playing a major role in the increased acquisition activity in Belgium. The reason is the increase in family investors and wealthy individuals, in combination with low interest rates. We are also seeing an increase in the number of interested foreign private equity investors who have more resources and look beyond borders for interesting deals.”


The Monitor reveals a significant increase in acquisition prices. In 2015, an average of 6.1 times the EBITDA value* was paid, compared with 5.6 times EBITDA in 2014 and 5.0 times EBIDTA in 2013.

  • In the smaller deals segment (less than 5 million euros), prices have remained more or less stable: on average, 4.6 times EBITDA was paid
  • For larger transactions (more than 100 million euros), this increases to an average of 8.5 times EBITDA, with peaks of 12.1.

Almost 50% of those surveyed also said that the final deal price agreed was higher than the initial offer. Only 1 in 4 deals ended with a sale price lower than the first offer. For the large majority of the deals, this difference did not surpass 30%.

How are the deals financed?

  • With the exception of the smaller deals, there is a strong increase in debt financing, which confirms that the current explosion in the acquisitions market is largely driven by cheap and easily accessible bank loans. The level of debt financing among acquiring companies is typically 3 times EBITDA, but can be as high as 5 times EBITDA for the largest companies.
  • 42% of all acquisition transactions are financed in part via a ‘vendor loan’. This form of financing, whereby the seller is prepared to temporarily loan part of the purchase price to the buyer, accounts for on average 16% of the total deal price.
  • In 31% of the deals there is an ‘earn-out’, whereby part of the payment of the sale price is deferred, and is dependent on future operating cash flow.


Although market evolution is driven primarily by the demand side, the research shows that 68% of all deals are initiated by the seller.

  • Almost half of all transactions take place via an auction. This is particularly true of the larger deals segment where 80% of deals over 100 million euros are concluded in this way.
  • The selling party opts for a vendor due diligence in just over 30% of transactions, allowing the process to run more smoothly. This fraction increases to 68% for the larger deals segment.
  • On average, the whole transaction process takes between 4 and 6 months.
  • There has been a sharp increase in competition on the demand side, particularly in the medium-size segment. On average, there are 4 bidding parties. For large deals in excess of 100 million euros, this number increases to 7. Despite the vast capital requirements needed to acquire very large targets, these sale processes often attract more interested parties due to their greater visibility, strong networks, the interest of foreign parties, and greater opportunities to realise economies of scale.

The ageing of the population, including entrepreneurs, will further increase the supply side on the M&A market. For the seller, it’s often the transformation of his life’s work into a financial pension. So, an efficient and liquid M&A market is required. But the SME offered for sale must also prepare itself in due time. This M&A Monitor provides valuable insights into how to capture maximum value.”
Wannes Gheysen (Responsible Succession & Acquisitions - Bank J.Van Breda & C°)

The M&A Monitor is reflecting very well the current relatively intense M&A activity in Belgium. Of course, the question will be whether this trend will continue. The persistent negative interest rate environment, and the impending Belgian corporate income tax reform, disturb a clear view on how valuation multiples and financing structure will continue to evolve. This puts further pressure on all parties involved to find the right balance between return and risk acceptance when closing a deal.”
Veerle Catry (Partner - BDO Belgium)

The availability of bank financing and dry powder at PE companies as prime drivers behind increasing M&A volumes, rising valuations and use of bank financing, and, on top, increasing uncertainty about the regulatory and tax environments... This M&A Monitor raises some important questions. Are we heading towards irrational exuberance? This is a market which requires discipline, stamina and a strong focus on fundamentals.”
Peter Maenhout (Managing Partner – Gimv)

* The asking price for a company is expressed as a multiple of the EBITDA value (i.e. the company’s earnings before interest, tax, depreciation and amortisation). EBITDA is a measure of a company’s operational cash flow.

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