Published Fortune Term Sheet — GF Data today released research showing that a growing gap in deal size premiums between small-market private equity deals ($10m-$25m enterprise values) and mid-market private equity deals ($100m-$250m enterprise values). Specifically, the small-market deals in the first half of 2011 were valued at 5.8x EBIDTA, while the larger transactions came in at 7.5x. The former figure matches up closely to the 2010 comp, while the latter is over a full turn higher than 2010’s 6.x EDITDA mark.
Andy Greenberg, CEO of GF Data, attributes the growing divide to a pair of factors: “One reason that smaller businesses are at more of a discount is because cashflow-based lending has not yet come back, which means that the low valuations are a problem for buyers as well as for sellers… The second issue is that the continued rockiness in the larger economy falls harder on smaller companies that are trying to get visibility on their performance.”