Increase in acquisition prices in Belgium has come to a standstill

Results of the M&A Monitor 2019

Gianni Spolverato

By Gianni Spolverato

Doctoral Researcher, Accounting & Finance

Mathieu Luypaert

By Mathieu Luypaert

Professor of Corporate Finance

16 May 2019

It appears the merger and acquisition market in Belgium has reached its turning point. For the first time in six years, the sustained rise in acquisition prices has not continued. However the number of transactions did continue to grow, even though there were considerably fewer foreign acquisitions in 2018. Another striking point is that the acquisition of technology and attraction of talent are gaining importance as motivations for an acquisition. Finally, when it comes to the size of transactions, smaller acquisition deals are on the increase.


These are the most important conclusions of the sixth edition of the M&A Monitor, an annual survey of more than 150 Belgian merger and acquisition specialists, including private equity investors, brokers, bankers, lawyers and corporate finance advisors. The research assesses these specialists' experiences on the M&A market and the deals they were involved in in 2018, as well as their expectations for 2019. The research was conducted by Professor Mathieu Luypaert and researcher Gianni Spolverato from the Centre for Mergers, Acquisitions & Buyouts at Vlerick Business School, in collaboration with Bank J.Van Breda & Co, BDO, Gimv and NautaDutilh.


  • In 2018, an average of 6.5 times the EBITDA value (i.e. operational cash flow) was paid for the acquisition of a company across all acquisition segments.
  • In the segment above 100 million euros, companies were sold for an average of 9.7 times the EBITDA.
  • For smaller transactions, under 1 million euros, the average was 4.4.
  • In terms of the sector, we find the highest multiples in pharmaceuticals (9) and technology (8.6); acquisition prices are lowest in retail, logistics and construction.

According to Mathieu Luypaert, the slight decrease in acquisition prices is a good thing: “Acquisition prices are determined on the basis of expected growth combined with risk. The sector and the difference between a large, established business and a small SME both play a role in that. Over five years, however, the multiple rose across the board from 5 to 6.7 in 2017. The risk was looming that profitability would no longer be in proportion to the risks of acquisition. We really had pretty much reached the maximum.

Number of acquisition deals

  • In terms of the number of transactions, however, the Belgian merger and acquisition market did experience growth in 2018: 60% of respondents noted an increase in the number of acquisitions spanning deals of all sizes.
  • What is striking, however, is the sharp decline in the number of foreign acquisitions by Belgian players (from 36% in 2017 to 25% in 2018).
  • 2019 has got off to a predominantly cautious start: only 40% expect a further increase in the number of transactions; 38% think the number of deals is stabilising and 22% even predict a decrease.

Mathieu Luypaert: “There is no lack of capital available among private equity players or companies. What is more, the historically low interest rates have ensured that loans are easy to access in general. So the caution in the predictions for 2019 probably has more to do with the general economic and political uncertainty resulting from factors such as Brexit, social unrest in France and the disputes between China and the US. That also explains the drop in the number of foreign acquisitions. Given the uncertain situation, acquirers express a preference for Belgian companies.”

Small is beautiful?

The survey reveals that the respondents do see a further margin for growth in the segment of smaller businesses with a value of less than one million. Competition in the medium-sized transaction segment (between 5 and 50 million) is fierce, which has led to many interested buyers moving towards the smaller deal segment where there is still sufficient availability.

Buyers who do that do need to be aware of the challenges,” Mathieu Luypaert remarks. “These are often family-run SMEs that come onto the market when an internal transfer within the family doesn’t go through. These companies are highly dependent on individuals and their network, which means that the entrepreneur in question is not always easy to replace.”

Shift in motivations for acquisition

For strategic buyers (corporations), increases in scales and additional distribution networks are still extremely important. However it is striking that the acquisition of new technologies and the attraction of talent are gaining considerable importance.

It is worth noting that acquisitions in 2018 were far more likely to be driven by non-material motives,” Professor Mathieu Luypaert explains. “So it seems that an increase in scale in itself is no longer a sufficient argument to justify a high acquisition price. However, the purchase of unique items like technology and knowledge enable an acquirer’s organisation to stay agile, switch tack quickly and, over time, to achieve greater value creation than merely through an increase in scale. That is certainly the case for the pharmaceuticals sector, where there is great interest in young biotechnology companies with promising products.

When it comes to investment companies, the most important motivations for an acquisition have not changed since previous years: a buy-and-build strategy (purchasing a single platform company from which to make further acquisitions), organic growth and improving efficiency.

Financing and deal structure

  • On average, 31% of the acquisition amount is financed with the acquirer’s own assets, across all sectors and deal sizes.
  • When it comes to debt financing, purchasers can borrow an average of 3.5 times the operational cash flow for an acquisition deal.
  • Risk plays an important role in this: you can borrow more for relatively safe property acquisitions than for acquisitions in the tech sector.
  • Vendor loans are used in one in three acquisitions, where part of the payment is delayed and spread over several years.
  • In one in four cases, part of the transaction is financed with an earn-out, where some of the payment is made dependent on the future performance of the acquired company.

Get in touch!

Mathieu Luypaert

Mathieu Luypaert

Professor Corporate Finance