• Unlisted

Private company valuations recover after Covid-19 rout

The UK’s private companies, which have combined turnover of more than £3.3 trillion and employ more than 15 million workers, are seeing their valuations slowly recover as the UK tentatively emerges from the worst of the Covid-19 lockdown and economic downturn, according to data from Unlisted, the UK’s real-time private company valuations engine.

Valuation have risen about 14% in aggregate as of 1 June since their monthly nadir on 30 April as sentiment improves, according to Unlisted calculations. The computer hardware sector has rebounded considerably, sector median valuation multiple climbing 35.8% from its lowest levels as the country gears up for remote working.

Overall private company valuations are still 39.3% lower than the levels they reached at beginning of March, when concerns about the Covid-19 epidemic in the U.K. accelerated. There are however some areas that have performed better than others over the lockdown period. Utilities sector have also done comparably better, the sector median dropping just 33.3%. The transport, petroleum and retail have been particularly hit, shedding 48.9%, 50.4%, and 47.0% in June since March. On the other hand, the property sector has weathered the derating well, the sector median dropping by 39.5% over the same period, which is consistent with the resilience seen in rental payments. 

CEO Dr. Amandeep Sahota commented: “The small but steady rebound in private company valuations is to be welcomed coming after such a significant decline earlier in the Covid 19 crisis, and shows that private companies are tracking to some extent the behaviour of publicly traded markets. 

“That recovery in prices will be welcomed by entrepreneurs, who along with their employees have been working hard to keep the economy afloat during this unprecedented crisis. At the same time the decline in valuations will be welcomed by private company investors will be able to snap up stakes in closely held businesses at value levels, much the same as fund managers are doing in the stock market at present.”

EV/EBIT sector median multiples

Note: Unlisted uses EV/EBIT estimates to generate valuations. EV is the Enterprise Value indicating how the market attributes overall value to a firm. EBIT is the earnings before interest and tax.