Q3 2023: How did the Swiss valuation parameters and the European M&A volume develop?

Valuation Market Essentials Switzerland - what key highlights did we observe in Q3 2023?

Download Q3 2023 brochure

In brief

• As in the previous three quarters, no new company has been listed on the SIX Swiss Exchange due to volatile market conditions.
• Compared to Q2 2023, the median EBITDA trading multiples decreased for all sectors except CC&M, and E&U.
• During Q3 2023, the European M&A market saw a 28% decrease in the total number of transactions, reaching 113 compared to 158 in the previous quarter.
• The P/E ratio increased for all banks and insurance companies compared to the previous quarter. Meanwhile, the P/TB ratio increased for global and private banks, as well as for insurance companies while it remained stable for retail and cantonal banks.
• Compared to the previous quarter, the spot rates of 10-year government bonds for USD, EUR, and CHF experienced an uptick, reaching 4.6%, 2.9%, and 1.1%, respectively, in Q3 2023. For USD and EUR 10-year government bonds, the spot rate as of 30 September 2023 reached the highest value over the past five years. 
• Considering the current market developments, for the market risk premium of the developing countries an updated range of 5.0% to 6.0% is applied depending on the risk free rate of local government bonds. For Switzerland, the applicable market risk premium remains at 6.0% considering a relatively low interest rate environment as compared to other countries.

In times of economic turbulences, we deem monitoring the developments of the most recent market data to be crucial to understand their impact on the key parameters used in corporate valuations. In our quarterly publication Valuation – Market Essentials Switzerland, we present the key highlights of the most recent market developments. The publication covers market multiples and cost of capital components per sector for the companies of the Swiss All Share Index (except general financial and real estate companies) as well as relevant macro-economic data used in business valuations.