September 14, 2018/Trend Reports

The Micro-Small Cap Market

Rising multiples may be headed for correction, but it is not evident in the lower end of market. Looking across private equity transactions, 2017 saw continued high valuations, with a third-quarter peak and subsequent year-end decline. Across all private equity transactions, median enterprise value-to-EBITDA (EV/EBITDA) multiples came down significantly from 10X in the third quarter of 2017, to 6.3X in the fourth quarter. This movement could suggest a coming correction beginning to take shape for at least some of the investment landscape as we continue forward through 2018. Such indicators are not reflected in the micro-small cap space, suggesting that rich multiples will persist for at least the near-term, and that any correction in this space could potentially lag the broader private market.

Sections within this Trends Report include:

  • Persisting Rich Valuations in Micro-Small Caps
  • Slowing Deal Activity, But Less Evident in Lower End
  • Mind the Gap: Investment Far Outpacing Fundraising
  • Conservatively Identifying and Unlocking Value