The Spanish M&A market shows clear trends heading into the close of 2023: more middle-market deals, greater family office prominence, and a valuation adjustment.
The Spanish M&A market in 2023 is showing an interesting pattern: while large deals slow due to the interest rate environment, the middle market remains active and is even gaining prominence.
The first half of 2023 saw a 15-20% decline in total M&A volume versus the same period in 2022. However, this decline is concentrated in larger deals — buyouts above 100 million euros — which are most sensitive to financing costs. In the sub-50-million segment, activity has remained relatively stable.
After two years of rising multiples (2021-2022), driven by abundant liquidity and historically low interest rates, 2023 has brought a healthy correction. Purchase multiples have moderated by half a point to one full point of EBITDA across most sectors.
This adjustment is welcome. The multiples of 2021-2022 were unsustainable and were generating transactions where the expected return was insufficient to compensate for the risk. The correction has brought rationality back to the market and created better entry points for investors with a genuine long-term perspective.
For sellers, the adjustment means that the days of receiving 8-10x EBITDA for a mid-sized company are, for now, behind us. But 5-7x multiples for a well-run, growing middle-market company are still attractive — and, importantly, they are achievable without excessive leverage on the buyer’s side, which means more deal certainty.
With large funds more cautious due to financing costs, family offices — which do not depend on bank debt for acquisitions — are gaining market share. They are buying more, buying better, and facing less competition for assets.
Buy-and-build platforms are particularly active in fragmented sectors: logistics, hospitality, industrial services, and distribution. The logic is straightforward — acquire a platform company at a reasonable multiple, then bolt on smaller operators at lower multiples, creating value through scale and integration.
The flow of transactions motivated by generational succession continues to grow. This is a structural trend barely beginning — Spain has approximately 1.1 million family businesses, and a significant proportion of their founders are over 60. This generational wave will provide abundant deal flow for the coming decade.
In 2021, almost any company with positive EBITDA found a buyer. In 2023, buyers are far more selective, prioritising revenue quality, recurrence, client diversification, and management team capability. Companies with these characteristics obtain valuations similar to 2022. Those without them suffer significant discounts.
The fourth quarter of 2023 should be active. There are transactions in progress that will close before year-end, driven by tax considerations and by the desire of both sellers and buyers not to carry processes into the new year.
In the middle market, we expect activity to hold or increase, driven by succession flow, sector consolidation, and greater patient capital availability. Valuations will stabilise at current levels — reasonable and sustainable — unless the macroeconomic environment deteriorates significantly.
A phenomenon deserving special attention is the growing prominence of family offices in the Spanish M&A market. While large private equity funds depend on bank financing to leverage their acquisitions — and that financing is now more expensive and harder to obtain — family offices operate predominantly with their own capital.
This structural difference gives them three competitive advantages in the current environment:
Independence from the credit cycle. A family office with 50 million euros in available capital can complete an acquisition with the same speed and certainty whether rates are at 1% or 5%. It does not need to negotiate with banks, does not need debt syndication, and does not depend on credit committees.
Longer investment horizon. Private equity funds have a 3-7-year investment horizon, forcing them to think about exit from the day of purchase. A family office can hold an investment for 10, 15, or 20 years, enabling value creation strategies that are not viable with shorter horizons.
Alignment with the seller. Many middle-market entrepreneurs prefer selling to a family office over a fund, perceiving greater alignment of values: long-term vision, commitment to the team, and business continuity. This preference gives family offices access to opportunities that funds do not see.
At Blue Mountain, we have observed that our family office nature — with patient capital and a long-term vocation — is a selling argument as powerful as the price we offer. The entrepreneur does not only want to know how much they will be paid. They want to know who will take care of what they have built.
Based on what we see in deal flow and macro trends, five sectors of the Spanish middle market will generate significant transaction activity:
The market remains active, capital is available, and conditions are fair. What has changed is the buyer’s level of scrutiny. Well-prepared companies with clean numbers, solid teams, and demonstrable growth will find buyers. Those that are not prepared will find it harder.
Preparation, once again, makes the difference. If you are thinking about selling your company within the next two to three years, now is the time to start preparing — not to wait for conditions to be “perfect,” because perfect conditions do not exist.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
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See also: Spanish M&A market review 2024 · How to sell a company in Spain · Direct investment vs funds · M&A outlook Spain 2025 · Value creation in the middle market.
By Blue Mountain Capital
By Blue Mountain Capital
By Blue Mountain Capital
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