(The following statement was released by the rating agency)Link to Fitch Ratings' Report: European Leveraged Finance Multiple EV-aluatorhttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=727609 LONDON/FRANKFURT, February 26 (Fitch) Market multiples for enterprise value across most sectors have rebounded from their cyclical lows in 2008-2009 and are nearing their long-term median level, according to Fitch Ratings' new 'European Leveraged Finance Multiple EV-aluator' reportThis rebound is largely driven by higher equity valuations. Median transaction multiples peaked around 10.0x in 2007 prior to the credit crisis and showed a gradual decline over the next few years, bottoming around 7.7x in 2010. Since then, median multiples have hovered around 8.0x. Energy, healthcare and telecoms have been the most active sectors in recent years. However, median transaction multiples among these sectors remain well below their pre-recession highs."The robust primary market activity witnessed in 2013 has not yet resulted in a material increase in transaction multiples. However, this could change slightly in 2014 as Fitch expects strategic M&A activity to increase due to low-cost funding, increasing corporate cash balances and an improved macroeconomic backdrop encouraging an increased deal volume," said Karsten Frankfurth, Senior Director in Fitch's Leveraged Finance Group. Fitch notes however that valuation discrepancies between buyers and sellers of sponsor-owned companies are expected to constrain valuation LBO multiples.Our report is primarily a reference document for investors who want to gauge and identify trends in leveraged multiples and their correlation with transaction and market multiples. The data provides insights into the volatility of implied equity cushions through the credit cycle, which is an important aspect when choosing distressed multiples for recovery analysis.The median Fitch-applied distressed valuation across all sectors of 5.0x is near the observed seven-year low for each sector. While this highlights a conservative approach to recoveries, evidence has shown that valuation multiples can reduce sharply in case of financial distress as the impairment of equity cushions accelerates dramatically once companies enter into financial distress.The 'European Leveraged Finance Multiple EV-aluator' report compares market valuation, transaction and leverage multiples differentiated by sector for a 10 year time-horizon. It also contains median multiples as well as key-parameters of recent M&A transactions. It is available atwww.fitchratings.com or by clicking the link above. Contact: Bryant BedwellAssociate Director+44 20 1581 3530Fitch Ratings Limited30 North ColonnadeLondon E14 5GNKarsten Frankfurth, CFASenior Director+49 069 768076 125Media Relations: Peter Fitzpatrick, London, Tel: +44 20 3530 1103, Email: peter.fitzpatrick@fitchratings.com.Additional information is available onwww.fitchratings.com ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
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Feb 26 (Reuters) - (The following statement was released by the rating agency)
Market multiples for enterprise value across most sectors have rebounded from their cyclical lows in 2008-2009 and are nearing their long-term median level, according to Fitch Ratings' new 'European Leveraged Finance Multiple EV-aluator' report
This rebound is largely driven by higher equity valuations. Median transaction multiples peaked around 10.0x in 2007 prior to the credit crisis and showed a gradual decline over the next few years, bottoming around 7.7x in 2010. Since then, median multiples have hovered around 8.0x. Energy, healthcare and telecoms have been the most active sectors in recent years. However, median transaction multiples among these sectors remain well below their pre-recession highs.
"The robust primary market activity witnessed in 2013 has not yet resulted in a material increase in transaction multiples. However, this could change slightly in 2014 as Fitch expects strategic M&A activity to increase due to low-cost funding, increasing corporate cash balances and an improved macroeconomic backdrop encouraging an increased deal volume," said Karsten Frankfurth, Senior Director in Fitch's Leveraged Finance Group.
Fitch notes however that valuation discrepancies between buyers and sellers of sponsor-owned companies are expected to constrain valuation LBO multiples. Our report is primarily a reference document for investors who want to gauge and identify trends in leveraged multiples and their correlation with transaction and market multiples. The data provides insights into the volatility of implied equity cushions through the credit cycle, which is an important aspect when choosing distressed multiples for recovery analysis.
The median Fitch-applied distressed valuation across all sectors of 5.0x is near the observed seven-year low for each sector. While this highlights a conservative approach to recoveries, evidence has shown that valuation multiples can reduce sharply in case of financial distress as the impairment of equity cushions accelerates dramatically once companies enter into financial distress. The 'European Leveraged Finance Multiple EV-aluator' report compares market valuation, transaction and leverage multiples differentiated by sector for a 10 year time-horizon. It also contains median multiples as well as key-parameters of recent M&A transactions. It is available at
Link to Fitch Ratings' Report: European Leveraged Finance Multiple EV-aluator
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Keywords: Fitch: Enterprise Value Multiples Rebound for Euro
