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Main Conclusions
- 1. The Argos Index® decreases to 9.5x EBITDA.
- 2. The Index is pulled down by both investment funds and strategic buyers, on both lower and upper mid-markets.
- 3. The mid-market M&A activity declined in Q1 by c.20%, impacted by the fast-growing uncertainty on US administration’s economic and trade policies.
- 4. The prior trend to a normalisation of the mid-market is clearly broken, and the expectations by some of an “animal spirit” driven boom are pulverised.
- 5. The mid-market remains however much less volatile than most financial markets, as usual.
The Argos Index® decreases to 9.5x EBITDA
The Argos Index® was down 3% to 9.5x EBITDA in Q1 2025. The 2024 recovery of mid-market prices was short-lived, as the M&A activity. Transaction multiples declined, at a similar pace, on all market segments: on the lower and upper mid-markets, and for both investment funds and strategic buyers.
This price decline was driven by the drop of M&A activity this quarter: of 20% in deal volume, 35% in declared value vs. Q4 2024. They have been impacted by the rapid deterioration of the economic outlook, reflecting growing anxiety about Trump’s economic and trade policies. Uncertainty surrounding the US administration’s policy has fuelled the stock market volatility and may have broken the 2024 (slow) recovery of the M&A activity.
In this context, European company valuations dropped despite improving financial conditions with decreasing inflation, close to its 2% target (1), and expected further interest rates cuts by the ECB. The market conditions were on a path to normalization, as both the M&A activity and Argos Index are close to their long-term average, with the standard deviation and share of extreme multiples of the index sample well below their 5 years average.
(1) Eurosystem Staff Projections (as of March 2025) forecast headline eurozone inflation of 2.3% in 2025, projected to decline to 1.9% in 2026 and stabilize at 2.0% in 2027, aligning with ECB medium-term target.
Argos Index® mid-market
Median EV/EBITDA multiple on a six-month rolling basis
Source : Argos Index© mid-market / Epsilon Research
The Index is pulled down by both investment funds and strategic buyers, on both lower
and upper mid-markets
Multiples paid by strategic buyers were slightly down at 9.2x EBITDA in Q1. Public equity market increased volatility, fuelled by US tariff threats, made it more difficult for corporate buyers and sellers to agree on prices. The impact on M&A prices was however limited as financial conditions are still improving and large corporates still earger to make transformative acquisitions on the face of structural changes.
Multiples paid by investment funds were down 3% to 10.0x EBITDA, despite decreasing borrowing costs and easier access to deal financing. They were indeed affected by slower PE activity this quarter, on the back of rising economic uncertainty. Investment in private equity decreased in
2024 for the first time in two decades (1), as PE funds are under pressure to sell assets and return cash to their backers.
The gap between multiples paid by investment funds and strategic buyers, though decreasing to 0.8x EBITDA, is still significant and in line with its average since 2021. Investment funds have a structuring role in the M&A market and keep on targeting higher quality assets.
(1) PE Assets Under Management decreased by 2% in 2024, confronting a $3tn backlog of unsold companies according to Bain Global Private Equity Report 2025 (in the FT, 06.03.2025)
Enterprise value / historical EBITDA
Source : Argos Index© mid-market / Epsilon Research
Continued decresase of transactions at extreme multiples
In Q1 2025 the share of transactions at extreme multiples (below 7x or above 15x EBITDA) is at its lowest level since Covid, as M&A conditions started to normalize in 2024 and despite recent economic turmoil.
Share of transactions at extreme multiples (<7x and >15x EBITDA)
Source : Argos Index© mid-market / Epsilon Research
Share of transactions at multiples >15x EBITDA Argos Index® sample
Transactions at multiples below 7x EBITDA account for 23% of analysed transactions, slightly up since the last quarter, highlighting downward pressure on prices.
Share of transactions at multiples <7x and >15x EBITDA Argos Index® sample
The mid-market M&A activity declined in Q1
by c.20%, impacted by the fast-growing
uncertainty on US administration’s economic
and trade policies
The (estimated) Euro zone mid-market M&A activity was down 20% in deal volume and 35% in disclosed value in Q1 2025 vs. Q4 2024, breaking with a continued two years upward trend. It was back to its early 2023 level.
The mid-market trend was in line with the global M&A market sharp fall in Q1: the number of deals(1) was the lowest in a decade, down 30% vs. Q1 2024 and 44% vs. 2021, the market peak.
The M&A markets were quickly impacted by the strong uncertainty on US economic and financial policies and threats on tariffs, that led to a simultaneous equity and bond market reversal. It quickly ended the M&A optimism fuelled by “animal spirits” that followed Trump’s victory in the US election in November.
(1) There have been about 6,600 global transactions announced, down almost 30% on a year earlier, according to Dealogic, in the FT, 24.03.2025
Eurozone mid-market activity (€15–500m) in volume (# deals) and value
Source : Argos Index© mid-market / Epsilon Research
Eurozone Mid-market - Number of deals
Investment funds activity is in line with the overall M&A market. Their share (1) of the last six months mid-market M&A has stabilized to 16% in number of deals but decreased to 22% in disclosed value.
(1) Does not include build-ups
Share of LBO in Eurozone Mid-market M&A
Source : Epsilon Research / MarketIQ
