FEELINGS AROUND GARP MULTIPLES IN THE LOWER MIDDLE MARKET
As we have seen in 2020; this has been a year of food fights in the lower middle market - especially in the healthcare, business services and light manufacturing spaces. As we know valuation is more of an art than a science and the investing culture of a firm or a sponsor will dictate their comfort around higher multiples but I am curious what the consensus is around businesses that deliver steady state FCF in this current environment. It feels like multiples - especially in auction situations lose all mooring with reality - we are seeing businesses with sub 5MM EBITDA going for high single digit and one at 10x multiples. I know we may sound like the old value investors we are but I am curious as to the community's thoughts around these situations ?