Safety company owners today are seeing probably the most intense M&A market the industry has ever seen, and… it’s fun to watch.
June of 2015 ended with a purchase of Capital Safety by 3M, for roughly 5.8 x sales. (That’s a multiple of gross revenue – NOT EBITDA) Capital Safety modestly estimated that the price they received was some 14 times adjusted EBITDA for their forthcoming year. That would mean that the profits related to that multiplier would have been expected to be $178M for the coming year. They said that the company’s sales growth has averaged 10% per year. Last year sales were $430M, so they might be expected to be $473M for 2015. $178M of profits would be about 38% of sales, if this were correct. It’s possible that Capital Safety was that enormously profitable, but I suspect that perhaps their 14x was adjusted for a modesty factor. (It’s almost embarrassing to have achieved such an astounding price.)