The first Moore GCF Market Valuation Index has revealed a wide gap between the earnings multiples of listed European companies and the global average – with Europe lagging by almost 50%.
The Index analyses the earnings multiples of leading companies across 13 sectors that make up around half the world’s GDP. Separately, it also focuses in on the valuation of European companies in same industries.
According to the new GCF Market Valuation Index, the global earnings multiple across these industries has been rising steadily over the summer to reach 16.3x EBITDA by September 30. In contrast, the average multiples for companies in the same sectors in Europe was 11.1x.
Our data shows the market valuation of leading companies in the world’s most important sectors has increased by 15%, on average, in the past two years – while earnings multiples of European businesses in the same industries have stayed flat.
A new tool for dealmakers
The Moore GCF Market Valuation Index will be updated regularly to give company owners a solid foundation on which to base their investment and M&A strategies.
Index data is based on stock market prices and public filings by listed companies but there is a widely accepted mechanism by which listed company earnings multiples can be discounted for privately held companies.
“This new tool is a great addition to the data analysis we already do and will help us when advising clients on the timing of transactions,” says Philippe Craninx, chairman of Moore GCF. “We can translate these multiples into valuations of private, unlisted organisations that reflect the size and liquidity differential, as well as company specific elements and local country risk.”
The Index was created by Moore GCF member firm Moore ASZ-Attolini Spaggiari Zuliani & Associati in Italy, using a combination of artificial intelligence (AI) and industry databases.
EBITDA (earnings before interest, taxes, depreciation, and amortisation) was chosen as the main metric for calculating valuations as it is widely used and gives a clearer picture of the core profitability of a business. This is because it ignores different tax rates, capital structures and accounting methods which may cloud the picture.
It is especially useful for comparing companies across industries, although it can never tell the whole story – especially in cross-border deals. Local taxation regimes and differences in business culture often play a large part in the success of multinational transactions, so seeking specialist advice is vital in putting the right deal structure in place.
“Our new Index highlights the attractions to US listed companies of M&A deals and acquisitions in Europe because the relative valuations in certain key sectors are so different,” says John Cowie, partner at Moore Kingston Smith in London.
“However, European business owners looking to sell need to be mindful of the need for specialist advice when dealing with overseas buyers. With our years of experience in cross-border deals, especially in the mid-market, our GCF teams across different jurisdictions can ensure the process runs smoothly.”
Global v European multiples
The stark contrast in the GCF Market Valuation Index for Global and European rankings can be largely attributed to four sectors.
The earnings multiple in Software solutions is almost 37x in the world index – that is three-times the European figure.
Media and entertainment along with consumer products manufacturing both enjoy multiples around 24x globally but their European equivalents are stuck at 17.5x and 10.38x respectively.
Renewable energy is another area where there is a wide gap in market sentiment. From the summer of 2020 to the spring of 2023 European multiples were buoyant, reaching as high as 26.3x in April 2022 when politicians across the EU were committing themselves wholeheartedly to green policies. Fast forward and today’s multiples in Europe have fallen dramatically, by 74%, to 6.9x – although the worldwide average is 22.5x
Creating Our Index
Moore Global Corporate Finance is a network of firms that specialise in assisting mid-market businesses – with particular expertise in cross-border deals where issues like local taxation regimes and business culture require special attention.
The cross-border mid-market segment outperformed the total M&A market last year in terms of volume and growth in the average value of deals, according to GCF’s Compass report.
The total value of global cross-border mergers and acquisitions involving mid-sized companies rose to €180 billion last year. The average deal value in the sector was €50.6 million in 2024, which is higher than each of the past six years except 2021 when there was a short bounce after the pandemic.
In the video below Giancarlo Attolini, founder and partner in Moore ASZ-Attolini Spaggiari Zuliani & Associati, explains how the Moore GCF Market Valuation Index was created.
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