9 Feb 2023
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Q4 2022: How did the Swiss valuation parameters and the European M&A volume develop?

Hannes Schobinger
By Hannes Schobinger

Partner, Leader Valuation, Modeling & Economics | EY Switzerland

Passionate about corporate finance.

Contributors

Marc Filleux

9 Feb 2023
Related topics Strategy and Transactions
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Valuation Market Essentials Switzerland - what key highlights did we observe in Q4 2022?

In brief

  • Over the past year the spot rates of the USD, EUR and CHF 10-year government bond increased significantly reaching 3.9%, 2.6% and 1.6% respectively at the end of Q4 2022. This is the highest level over the past five years for all rates except USD which reached it’s 5 year high in October 2022.
  • The EBITDA trading multiples (median values) increased for all sectors except for CC&M, which decreased slightly.
  • The P/TB of global and private banks as well as the insurance companies increased as compared to the previous quarter. Especially the P/TB ratio for insurance companies increased significantly in the past year, reaching 2.0x compared to 1.3x in Q4 2021.
  • The total number of transactions in the European M&A market decreased by 20% to 147 in Q4 2022 as compared to 183 in the previous quarter.
  • During Q4 2022, the average deal volume increased to USD 762m, which is a significant increase as compared to the previous quarter but still lower than in Q2 2022.

In times of economic turbulences, we deem monitoring the developments of the most recent market data to be crucial to understand their impact on the key parameters used in corporate valuations. In our quarterly publication Valuation – Market Essentials Switzerland we present the key highlights of the most recent market developments. The publication covers market multiples and cost of capital components per sector for the companies of the Swiss All Share Index (except general financial and real estate companies) as well as relevant macro-economic data used in business valuations.

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Sector abbreviations:

R&CP – Retail and consumer products

E&U – Energy and utilities

IG&S – Industrial goods and services

MT&T – Media, technology and telecommunication

CC&M – Chemicals, construction and materials

  • Trading multiples Switzerland

    In Q4 2022 the median trading EBITDA multiples of the six sectors showed the following development.

    Given that, for Q3 2022 and Q4 2022, the EBITDA figures for most companies across all sectors are based on the same financials as of September 2022 (19% of companies) and as of June 2022 (77% of companies), the development of the multiples is mainly driven by the development of market capitalization of the major part of the underlying companies. To gain further insights into the development of trading EBITDA and EBIT multiples per sector and subsector during the last 5 quarters, explore our Dynamic Dashboard by clicking on the link given above.

  • Transactions Europe

    Total number of deals in Q4 2022 vs. Q3 2022

    147

    The number of deals in the European M&A activity declined by 20% from 183 to 147 deals during Q4 2022.

    *The total number of deals means M&A deals, which were announced or announced & closed and have published at least one of the Revenue, EBITDA, or EBIT multiples.

    Total number of deals in Q4 2022 vs. Q4 2021

    -36%

    As compared to the same quarter last year, the number of deals declined by 36%.

    The overall decrease in the number of transactions with respect to Q3 2022, was driven by all sectors except the Healthcare sector, which witnessed a slight increase.

    R&CP: The M&A activity declined slightly to 27 transactions in Q4 2022

    E&U: The M&A activity declined from 7 transactions in Q3 2022 to 3 transactions in Q4 2022

    Healthcare: After a decline to 14 transactions in Q3 2022, the M&A activity slightly increased to 15 transactions in Q4 2022

    IG&S: The M&A activity is on a declining trend since Q2 2022 reaching 49 transactions in Q4 2022

    MT&T: After a decline to 59 transactions in the previous quarter, the number of transactions declined further to 46 transactions in Q4 2022

    CC&M: After an increase in Q2 2022 and Q3 2022, the M&A activity declined to 7 transactions in Q4 2022

    Average deal volume in Q4 2022

    USD 762m

    After decline in the previous quarter, the average deal volume (total deals value/number of deals) increased to USD 762m in Q4 2022 driven by all sectors except E&U and R&CP.

    Top Country

    UK

    During the last seven quarters, UK has retained the top spot among the countries in terms of number of deals and location of the target company. In Q4 2022, the number of deals in the UK contributed 29% of the total transactions, followed by Italy (13%) and Germany (11%).

  • Unlevered beta

  • Debt to total capital ratio

    Given that for Q3 2022 and Q4 2022, the debt figures for the companies are based on financials as of September 2022 (19% of companies) and as of June 2022 (77% of companies) the change in the debt to total capital ratio is primarily driven by the development of market capitalization of the companies. Based on the same financials as of June 2022 (for a major part of the companies), the median debt to total capital ratios decreased since Q3 2022 for all sectors.

    To drill down through the debt to total capital ratios on a sector-by-sector basis during the last 5 quarters visit our Dynamic Dashboard by clicking on the link given above. 

  • Banking and Insurance Sector

Summary

Our Valuation, Modeling & Economics Team is here to support you with Valuations, Liquidity & Scenario Planning, Portfolio Analysis, as well as other services to help you navigate through your action plans!

Acknowledgements

We thank Michael Keck, Alex Benhauresch and Elizaveta Leontyeva for their valuable contributions to this article.

About this article

Hannes Schobinger
By Hannes Schobinger

Partner, Leader Valuation, Modeling & Economics | EY Switzerland

Passionate about corporate finance.

Contributors

Marc Filleux

Related topics Strategy and Transactions
Upvote