M&A Valuations in Mid-Market: Sector Divergence and What Buyers Are Paying

European mid-market M&A activity has entered a period of selective recovery, characterised by significant divergence across sectors and deal profiles. While aggregate transaction volumes remain below the peak levels of 2021-2022, the quality of deal flow and the competitiveness of processes for premium assets have returned to pre-pandemic norms in several segments.

Technology-enabled business services continue to command the highest valuation multiples in the current market. Businesses demonstrating strong recurring revenue characteristics, typically with 70%+ of revenue under contract, are achieving EV/EBITDA multiples of 12-16x in competitive auction processes. The combination of revenue visibility, margin expansion potential, and platform acquisition logic continues to drive both strategic and financial buyer appetite.

Healthcare services, particularly in the fragmented European market, represent another sector where buyer demand exceeds available supply. Dental, veterinary, and specialist clinic platforms are trading at 10-14x EBITDA, supported by the defensive growth characteristics and the consolidation opportunity that the sector presents. Cross-border transactions within Europe have become increasingly common as platforms seek geographic diversification.

Industrial technology and automation businesses have emerged as a notable area of valuation premium. Companies providing mission-critical software, sensors, or automation solutions to manufacturing clients are benefiting from the secular trend toward digitisation of industrial processes. Multiples of 10-13x EBITDA are achievable for businesses with demonstrable technology differentiation and blue-chip customer bases.

Conversely, traditional consumer services, hospitality, and undifferentiated distribution businesses continue to face buyer scepticism. Multiples in these segments remain compressed at 5-7x EBITDA, with acquirers demanding higher quality of earnings and more conservative growth assumptions than in previous cycles.

For sellers considering a process in the current market, our advice centres on preparation quality. The valuation premium achievable through a well-structured process with comprehensive vendor due diligence, a clear equity story, and targeted buyer engagement typically exceeds 1-2x EBITDA versus a reactive or poorly prepared sale. In a selective market, the margin between an average outcome and an optimal one has never been wider.