The Belgian M&A market in 2024: stability on the surface?

At first glance, the Belgian M&A market in 2024 appears stable: deal volumes hovered around the previous year’s levels and valuation multiples edged upward from 6.4x to 6.5x EV/EBITDA. However, this “stability” conceals significant internal contradictions:

• Stark valuation disparities: A 1.1x EBITDA difference exists between targets in Wallonia and Flanders. For similarly sized deals, that’s a material gap. It’s not just about geography: it signals perceived execution risk and economic confidence.
• Fragmented activity by deal size: Sub-€20m deals remained resilient, but mid-sized (€20–50m) and large (>€50m) transactions declined. This bifurcation suggests liquidity and risk appetite are constrained to the lower end of the market.
• Private equity remains cautious: Despite abundant dry powder, PE exits shrank again. Even within the PE world, earnouts on >€50m deals dropped from 27% to 15%, hinting at reluctance to commit to long-term contingent payouts under volatile conditions.

A standout insight: 59% of deals featured a valuation gap of at least 10%, and 28% saw gaps above 20%. Crucially, this misalignment isn’t purely psychological. The Monitor points to:

• Overreliance on EBITDA multiples: Used in nearly three-quarters of transactions, often without adjusting for CAPEX or working capital needs.
• Low adoption of forward-looking methods: Discounted cash flow (DCF) is used in only a minority of deals, despite its relevance in contexts of macro volatility. Its lower usage likely reflects its complexity, sensitivity to assumptions, and a market still heavily reliant on multiples for speed and comparability.
• The valuation gap is a byproduct of methodological inertia. Sellers think in terms of vision and strategic potential; buyers remain anchored in historical multiples. Until DCF and strategic valuation logic become more mainstream, the gap will persist.

The Monitor shows a divergence in the use of earnouts vs. vendor loans, depending on deal size: earnouts declined, particularly in large deals, suggesting that strategic acquirers may be prioritizing clean break acquisitions. Vendor loans increased in sub-€1m deals, likely reflecting financing constraints on micro-buyers more than a deliberate structuring strategy.

These tools are often treated as interchangeable. They are not. Earnouts mitigate valuation gaps under growth uncertainty; vendor loans address liquidity constraints. Misapplying either reveals deal asymmetry or financial stress, not structuring creativity.

Beyond the headline differences in multiples, regional disparities remain persistent even within the same size categories. Flemish targets consistently command higher multiples than their Walloon or Brussels counterparts, even for mid-sized transactions.

Geography acts as a proxy for investor confidence, perceived governance quality, and transaction visibility. For sellers and their advisors, recognizing these regional perception (biases) is essential to anticipating valuation expectations and identifying the right pool of buyers.

Warranty & Indemnity insurance, once the preserve of €100m+ deals, is now gaining ground in transactions as low as €20–50m. This evolution signals an increasing standardisation of risk allocation mechanisms, even outside the top tier.

W&I is no longer just a tool for the big league. Its adoption reflects a growing need for procedural clarity and reassurance, especially in competitive or time-constrained deals.

ESG analysis is slowly becoming part of mainstream M&A due diligence. Interestingly, the uptick comes primarily from strategic buyers, not private equity funds. ESG is evolving from a compliance issue into a lever of value creation and integration success. Strategic acquirers are starting to see ESG not just as a risk but as a source of post-deal stability and alignment.

To conclude, the Belgian M&A landscape in 2024 was not defined by acceleration, but by recalibration. Dealmakers across the board showed signs of growing confidence, but the system as a whole remains constrained by valuation gaps, structural risk aversion, and uneven capital deployment.

The road ahead will favour those who:

• Understand how to bridge pricing gaps creatively, not just financially.
• Acknowledge geography and perception as strategic & valuation variables.
• Anticipate that deal structuring is no longer a formality but strategic levers that require real expertise.

The market may appear stable, but it is actively choosing its next direction. For buyers, sellers, and advisors alike, 2025 will reward clarity of process, precision of valuation, and depth of conviction.