- On March 27, 2017
Succession Resource Group reported findings from deals done in 2016.
Here are interesting takeaways:
- 2.60 was the average recurring revenue multiple in 2016 matching the average in 2015. Larger down payments kept recurring revenue multiples from increasing in 2016.
- The average down payment increased 5.5% YOY to 57% vs. 54% in 2015. RIAs averaged higher down payment of 65%.
- External financing for acquisitions increased by more than 2.5 times going from 29% in 2015 to 76% in 2016. External financing for acquisitions has increased a projected 1100% since 2013.
- When external financing is used the average down payment was 76%.
- DOL is the likely culprit in causing transactional multiples to decrease in 2016.
- Deals with contingencies increased from 41% to 44% in 2016.
- While acquisitions slightly decreased for sellers aged 51 to 70 they slightly increased for sellers under 50 years old.
- Values are expected to remain constant in 2017.
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