What is the average EBITDA (Earnings Before Interest and Taxes) in France per company? What is the theoretical average valuation of companies in France on this basis? An analysis by XVAL based on data from the ESANE survey conducted by INSEE in France.
What is EBITDA?
EBITDA is a financial ratio often used to evaluate the profitability of a company and its ability to generate profits. However, it should not be confused with net profit, which is the final result of the company after deducting all costs and expenses, including taxes.
To calculate the EBITDA, the following formula is used:
EBITDA = Total revenue - Cost of goods sold - Production costs
For example, if a company has revenues of €100,000, cost of goods sold of €50,000 and production expenses of €20,000, its EBITDA would be €30,000 (€100,000 - €50,000 - €20,000 = €30,000). This means that the company has generated a gross surplus of €30,000 before deducting other costs and expenses.
Why is it interesting to know the average EBITDA of a company in France?
The analysis of the EBE data in France allows us to better understand :
- The profitability of a sector in relation to another sector in terms of sales, workforce, etc. This data can be useful in the context of strategic choices or investment arbitration in a sector.
- The average valuation of a company in France. If we take into account that one of the main methods of valuation at the time of a transfer is an average multiple of the EBITDA, we can establish the average valuation of companies in France.
- Theoretical valuation of all companies in France.
Some precautions about the data:
Data from the ESANE database (source INSEE 2018), restated for unavailable and confidential data according to INSEE. 23,269,448 companies are included in the panel.
What is the average valuation level in France and the average EBITDA in France?
In France, the average level of EBITDA is 71 KEUR per year per company , i.e. if we take a multiple between 4 and 7 times the EBITDA (maximum duration of a financial credit for acquisition), we can consider that the average amount of valuation of a company in France varies between 284 KEUR and 497 KEUR
However, this analysis requires taking into account that the amount of accounting EBITDA of a company does not always reflect the realization of its operating EBITDA and that it is necessary to restate the EBITDA (exceptional expenses, related to the management team, etc.) before valuing a company.
What is the theoretical valuation level in France of all companies?
If we use the same ratios of 5 to 7 times the EBITDA and apply this ratio to the total amount of EBITDA generated in France (EUR 1,674 billion), we obtain a valuation of between EUR 8,372 billion and EUR 11,722 billion, i.e. approximately 24 times the annual state budget.
What is the level of EBITDA per sector of activity in France :
There are very large disparities by sector in France in terms of the average EBITDA generated by companies in the sector:
- Software publishing: 227.8 KEUR per year and per company
- Manufacture of sports articles: 131.5 KEUR per year and per company
- Hotel industry: 120.9 KEUR per year and per company
- Tour operator: 78.8 KEUR per year and per company
- Roofers: 31,3 KEUR per year and per company
- Catering 26,7 KEUR per year and per company
- Hairdressing: 9.8 KEUR per year and per company
If you would like to have more information on this study or if you would like to start a valuation study of your company, do not hesitate to contact the XVAL consultant of your sector of activity:
