The third quarter of 2008 saw a marked reduction in the number of deals that completed in the UK. However, for those that did, prices held steady. The Private Company Price Index (PCPI) p/e ratio for sales of companies to trade acquirers was 11.5 times, up marginally on the previous quarter’s 11.3 times. Similarly, the Private Equity Price Index (PEPI) p/e ratio was 11.2 times which remained relatively unchanged from the previous quarter’s 11.1 times.

To recap, the PCPI, compiled by BDO Stoy Hayward, tracks the sale prices of large businesses as a multiple of their after tax earnings. However, as owner managed profits tend to be understated to avoid taxation then the multiples will tend to be overstated as the information is gleaned from publicly available information.

By comparison, the FT Non-Financials Index (FTNF) fell 11 per cent this quarter from 12.4 times to 11.0 times, most noticeably hit by the turmoil in the markets caused by the collapse of the banking sector in the second half of September.

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