SMES Valuations explained

The SME division looks at inorganic growth initiatives of family-owned businesses across traditional industries.

valuations of small and medium enterprises

Valuation is dependent on the industry in which the SME operates. The Enterprise Value to EBITDA multiple is common across most traditional industries. Certain businesses also merit premiums on the basis of their established track record, niche positioning or vintage within the industry.

Ritrama is the market leader in self self-adhesive labels with over 400 mn in revenues. Wholly Owned by the Rink family from Italy, the business has grown to over 1,000 employees in 50 years.

Recently the Rink Family, decide to sell Ritrama to Fedrigoni Group, a competitor in the – pressure – sensitive labels business and backed by Private Equity firm Bain Capital

Ritrama, with revenues in excess of 400 million euro and EBITDA margin’s of 7% was sold at an EBITDA multiple of 9.8x

Looking at the valuation profile of listed peers, we can see that larger companies obtain a higher valuation.

At 1 st instance, it may seem Ritrama was sold lower than the market multiple, but bear in mind that Ritrama is smaller, being marginally bigger than Ennis and hence should be ideally valued towards the lower end.

Here, the legacy of the family business, client relationships built over many years and strong demand for assets that are in short supply enable Ritrama to be valued to obtain a premium and be valued closer to market means.


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