The value of assets in Russia increased after the reduction in transactions with foreigners

The indicators still differ from pre-crisis levels due to the unstable economic situation, sanctions and the strict monetary policy of the Central Bank of Russia.

At the end of the first half of 2024, assets on the Russian market began to be valued more expensive due to the reduction in transactions with foreigners, where there is a mandatory discount. In January-June, companies in M&A transactions were estimated to have made five annual earnings before interest, income taxes, depreciation and amortization (EBITDA), instead of three or four earnings a year earlier.

The average EV/LTM EBITDA (multiplier) for all deals in the Russian M&A market is now 5.2 times, the median is 4.9 times. In the second half of 2023, the average value of the indicator was 4.2x, the median was 3.2x.

During the first half of 2024, 309 transactions worth $13.4 billion were carried out in the Russian market, of which only 26 were purchased from foreigners.

The multiplier also became significantly higher in transactions between Russian individuals than in transactions involving the departure of foreigners from assets in Russia: the median was 5.3 times versus 2.3 times. It should be noted that until 2022 the trend was different: for purely Russian assets the indicator was 6.5 times, and for transactions with foreign assets – more than 7 times. The reversal occurred due to the fact that a mandatory discount is now applied for transactions with foreigners – at least 50% of the value of the company.

The reduction in transactions with foreigners caused an increase in EBITDA EV/UDM, but experts believe that this factor is not the main one. The unstable economic situation, sanctions and strict monetary policy of the Central Bank of the Russian Federation also play a role.