Despite the overheating of prices and the influx of liquidity, US banks remain convinced of the resistance of the unlisted. To fill the lack of targets, Goldman Sachs wants to invest the market of 1,200 medium-sized private companies in Europe.

Acquisition prices in the unlisted crossed an all-time high in Europe last year at 11 times EBITDA, and still close to 10 times.

With rates low, 2019 should end with a record private equity raised, according to Goldman Sachs. But the overheating of the sector does not really worry US banks.

More than 19 mega funds are on track to raise $ 185 billion worldwide. And this, while investment companies already have a record of capital to deploy, including in Europe (194 billion dollars in stock with LBO funds).

In the Old Continent alone, Swedish EQT and British CVC must each invest more than 16 billion, Ardian more than 15 billion, and Hellman & Friedman more than 14 billion like and Cinven.

Soaring prices

The rare opportunities have caused acquisition prices to soar to an all-time high, at 11 times EBITDA last year. Valuations that always exceed 9.7 times.

But rather than downsizing, Goldman Sachs, like JP Morgan, is tackling finding new targets for funds. They launch their investment bankers on the hunt for unlisted companies of less than 2 billion euros. Usually too small companies for them to be interested in them, but which have now become a priority with the influx of liquidity which irrigates private equity.

“Covering large private or listed companies is no longer enough. The number of companies welcoming private capital is growing. Attempts to delist are exploding in Europe. We must respond very early on, as soon as companies, even medium-sized, accelerate their growth ”, says Céline Méchain, partner of Goldman Sachs in charge of hedging investment funds in Paris.

It is she who will pilot the French version of the new global team of Goldman Sachs called “Cross market Group” and which is responsible for tackling “This new universe still little covered by investment banks”.

1,200 target European companies, including 500 in France

The American bank already has around 1,200 private companies in Europe, including around 500 in France, with a valuation of 300 million to 2 billion euros.

She has a fairly precise vision of those who must be convinced to sell them: 70% of them welcome financial investors in their capital, 20% families or an entrepreneur. The remaining 10% are “fast moving companies” in the digital economy, fintech, tech or biotech.