Significant regional price disparities in Belgian mergers and acquisitions market – recovery remains elusive for now

These are the main conclusions of the 12th edition of the M&A Monitor, an annual survey of 156 Belgian mergers and acquisitions specialists, including corporate finance advisers, private equity investors, strategic advisers, bankers and lawyers, representing a complete spread of sectors and transaction sizes. As well as gauging their experiences with the deals they were involved in in 2024, the study looked at their expectations for 2025.

The research was carried out by Professor Mathieu Luypaert and researchers Sarah Muller and Tom Floru from the Centre for Mergers, Acquisitions and Buyouts at Vlerick Business School, in collaboration with Bank Van Breda, Moore, Van Olmen & Wynant and Wallonie Entreprendre. The survey was conducted in February.

Belgian market remains stable – albeit at historic low levels

After two consecutive years of downward trends in the number of transactions, 2024 saw the Belgian mergers and acquisitions market somewhat stabilise, with only larger transactions experiencing a decline. Historically speaking, the market is still at its lowest level.

• A little over 1 in 4 respondents (27%) indicated that the number of transactions remained stable in 2024. 37% saw a decline, while roughly the same number of respondents (36%) noticed a slight increase.
• Just over half of respondents reported significantly fewer larger transactions (>€20 million) in 2024. Smaller transactions, on the other hand, remained stable or even increased slightly, according to three out of four respondents.
• 63% expect a moderate increase in 2025, particularly in the larger deal segment (>€50 million).

Kristoph Wauters, M&A Advisory Expert at Bank Van Breda: “Larger transactions are clearly more sensitive to market conditions and more dependent on financial markets and international tensions. Smaller deals, on the other hand, are much more driven by demographic factors. The lack of succession planning remains a persistent trend, with owners not waiting until retirement age, instead choosing to initiate sales proceedings earlier. Finally, at the start of 2025, we observed a greater willingness to invest among our clients, thereby supporting the expected turning point identified in the study. However, we are not yet seeing any real upward trend. After all, business confidence appears to be the most important driver of transactions, with current geopolitical tensions and trade wars only adding to the uncertainty.”

Exit problems for private equity

Financial buyers, such as investment funds and private equity firms, clearly had a harder time closing deals in 2024 than strategic buyers.

• 39% observed a negative trend in financial transactions (compared to 25% for strategic deals). Moreover, for 24% of respondents, this decline was over 10%.
• Almost half (45%) also reported a decline in the private equity exit market.

Matthieu Luypaert, Professor of Corporate Finance at Vlerick Business School: “In 2024, private equity firms clearly had a harder time selling their portfolio businesses at the desired price. The typical lifespan of such funds is 10 years. Due to the continuing downward trend in the M&A market, sales are taking longer to materialise, while the pressure to sell is increasing. We see that this often leads to PE firms selling to other existing funds or postponing their exit until market conditions improve, via what are termed ‘continuation funds’, where a fund manager sets up a new fund to take over the assets of the existing fund.”

Stable valuation but gap in price expectations

In 2024, the average price paid to acquire a company across all size segments was 6.5 times the EBITDA value (i.e. the operating cash flow), remaining virtually unchanged from  2023 (6.4). When it came to smaller deals (<€5 million), this multiple stood at 5. For larger deals (>€100 million), it was 10.5.

• Historically, the smaller segment has remained fairly stable. While deals worth more than €20 million have declined for three years consecutively, we are now seeing an increase from 7.8 (2023) to 8.4 (2024).
• When it comes to specific sectors, the highest multiples are still to be found in technology (9.1) and pharmaceuticals (8.5), while retail (5.6), logistics (5.5) and construction (4.8) sit at the bottom of the table.
• 59% of respondents indicated that buyers’ initial offers were on average more than 10% below sellers’ expectations, and 28% reported a valuation gap of over 20%.

Philippe Craninx, Managing Partner at Moore Corporate Finance: “The study shows that multiples of EBITDA are by far the most commonly used valuation method. This was true for 72% of deals in 2024. That said, we must be careful not to place too much trust in this rather simplistic method of determining value. People often underestimate the complexity of mechanisms of both value creation and managing succession or integration. Another striking feature is the large valuation gap between the initial bids and the sellers' expectations – something that was surveyed for the first time this year. This may indicate that sellers have been overly optimistic or even unrealistic –  though buyers do also sometimes deliberately initiate the bidding process too low out of opportunism.”

Significant regional differences in valuation

For the first time, research was conducted into whether geographic location has an impact on price. This revealed that the multiples in Wallonia appear to be significantly lower, except for larger transactions.

• Walloon targets were sold at an average multiple of 6.0, compared with 6.5 in the Brussels Region and 6.9 in Flanders.
• For transactions above €20 million, region is not a factor. The differences are mainly found in the smaller segment, where Flanders holds the highest multiples. For deals under €5 million, the multiples are 5.1 in Flanders, 4.3 in the Brussels Region and 4.4 in Wallonia. For deals between €5 million and €20 million, the corresponding figures are 6.5, 6.2 and 5.5.

Financing and deal structures – insurance on the rise

• Bank financing remains significant: in 2024, buyers were able to borrow an average of 2.9 times EBITDA (vs. 3.2 in 2023).
• In 43% of the deals, vendor financing was used (i.e. a loan from the seller whereby the buyer pays part of the price in instalments). This percentage is now back at a record high.
• In the medium-sized segment (€20 million to €50 million), the use of warranty and indemnity insurance proved significantly more common: from 9% of deals in 2023 to 25% in 2024.

Luc Wynant, Partner at Van Olmen & Wynant: “In larger deals, warranty and indemnity insurance has long been a standard part of negotiations. In recent years, however, we have seen these insurance policies become hugely popular in the smaller deal segment as well. Foreign brokers are becoming increasingly active in the small and medium-sized Belgian market, offering not only standard W&I cover, but also policies tailored to known risks, such as tax liabilities, environmental exposure and real estate issues.”