Acquisition prices for European SMEs down to 9.2x EBITDA against a backdrop of macroeconomic uncertainty
The mid-market Argos Index® for the second quarter of 2025—published by Argos, the independent European investment fund, and Epsilon Research, the online platform for the management of unlisted M&A transactions—is now available. Launched in 2006, this index tracks the valuations of unlisted eurozone SMEs in which a majority stake has been acquired during the last six months.
“The current macroeconomic context is creating a climate of uncertainty that is having a direct impact on eurozone SME valuations, which fell again in the second quarter of 2025. President Trump’s ‘Liberation Day’ tariffs announcement in April significantly impacted the economic outlook, disrupting global trade, value chains and the M&A market. The decline in valuations is continuing despite the improving fundamentals in the eurozone, which are linked to falling inflation and interest rates,” said Louis Godron, Chair of Argos .
Acquisition multiples for unlisted European SMEs fell to 9.2x EBITDA in Q2.
Median EV/EBITDA multiple on a six-month rolling basis – Source: Mid-market Argos Index® / Epsilon Research
- In the second quarter of 2025, the Argos Index® fell 3% to 9.2x EBITDA, due to the combined effect of lower prices paid by strategic buyers, a further increase in low-multiple transactions and lower M&A activity in the eurozone mid-market.
Prices paid by strategic buyers fell, while those paid by investment funds remained stable.
- In the second quarter of 2025, multiples paid by investment funds held steady at 10.0x EBITDA. That stability was due to lower inflation and interest rates in the eurozone, along with the pressure on funds to invest committed capital or return it to investors. Funds focused on high-quality companies that are resilient to downturns. Accordingly, the tech and healthcare sectors accounted for 45% of the index’s sample, and business services 28%.
- Although listed European equity markets rallied, multiples paid by strategic buyers fell to 8.5x EBITDA because of the highly changeable US trade and tariff policy[1]. Polarisation reached a historically high level, with large corporations making both opportunistic acquisitions at low prices, and strategic ones at very large premiums.
- The gap between multiples paid by investment funds and strategic buyers widened to 1.5x EBITDA during the quarter. The average volume of transactions financed by investment funds was 60% higher than the volume financed by strategic buyers.
[1]The EURO STOXX TMI Small Index rose by 9% in the second quarter of 2025 and 15.5% in the first half of the year.
The proportion of transactions at multiples of less than 7x EBITDA pushed average valuations lower.
- In the second quarter of 2025, 40% of transactions took place at extreme multiples, i.e. less than 7x or more than 15x EBITDA.
- This represents an increase, and was driven by transactions at multiples of less than 7x EBITDA. These accounted for 27% of the transactions analysed, showing ongoing downward pressure on valuations.
- The proportion of transactions at multiples of more than 15x EBITDA was low at 13%, unchanged from the previous quarter.
Eurozone mid-market M&A activity continued to fall.
- Mid-market M&A activity in the eurozone fell by a further 5% in volume terms and 14% in value terms compared with the first quarter of 2025.
- A similar downtrend can also be seen in worldwide volumes, and in Europe as a whole, where activity was down 10% in volume terms and 5% in value terms[1].
- Investment fund activity fell in the first half of the year, at a similar pace as the decline seen in the overall M&A market. In terms of the number of transactions, investment funds accounted for 15%, whereas in terms of value their proportion increased to a record 33%.
[1] Source: LSEG in Les Echos, 01.07.2025
Argos
Coralie Cornet
[email protected]
+33 6 14 38 33 37
Argos / argos.fund
One company, two strategies. Argos is an independent European private-equity group that supports the growth of SMEs and mid-caps and their management teams. It has €2 billion in assets under management and 35 years of experience, has supported more than 100 companies so far and operates from offices in Amsterdam, Brussels, Frankfurt, Geneva, Luxembourg, Milan and Paris. The group seeks to acquire majority interests and invests between €10 million and €100 million per deal via its two strategies: i) The Argos Mid-Market fund helps companies arrange changes of ownership in order to accelerate growth. ii) The Argos Climate Action (SFDR article 9) fund aims to shape sustainable European leaders by facilitating their grey-to-green transition.
Epsilon Research has developed the leading professional online platform for the management of unlisted M&A transactions. The platform includes data, analysis reports, software tools and services that are essential for evaluating and managing unlisted investments: The EMAT database of European transaction multiples, with detailed analysis of over 10,000 M&A deals covering all industry sectors; indices and studies published regularly by Epsilon, including the Argos Index®; a tool for evaluating the portfolios of private equity funds; cloud-based M&A CRM and project management software; and an online dataroom for SME transactions.
The mid-market Argos Index® tracks valuations of unlisted mid-market companies in the eurozone. Compiled by Argos and Epsilon Research and published every three months, it shows the median EV/EBITDA multiple, on a six-month rolling basis, of transactions that meet the following criteria: mid-market deal (100% equity value between €15 million and €500 million), target based in a eurozone country, acquisition of a majority stake, certain activities excluded (financial services, real estate, high tech).
