“There are a lot of companies that are flushed with cash, they want to do deals and targets that feel that they are 20 percent below their historic highs so they are not as interested in doing a deal,” he explained. “So that’s the right territory for a lot of unsolicited bids.”

I agree with Frank Aquila’s comment in this article. We have several clients on the buy-side that are positioned strongly financially - flush with cash and ready to grow. We are also seeing plenty of opportunities in the marketplace when it comes to strategic acquisitions, particularly with “not-for-sale” companies.  Financial players are still on the sidelines.   The biggest issue is that target companies are stuck on valuation multiples from 2-3 years ago, and, as we all know, times have changed.  As Mr. Aquila also stated, companies are 20 percent below their historic highs.

We believe deals will get done in the middle market, but both parties must be flexible when it comes down to deal structure.  Buyers and sellers must put everything in the context of the current economic environment and meet in the middle.

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From my recent experience working with middle-market companies, I would have to agree with this article that states that there were an increasing number of divestitures by multinational corporations (MNC) in 2009.  In particular, my work in the specialty chemical industry showed me that the economic downturn has forced many MNC’s to reassess their portfolios. This reassessment includes divesting any businesses that are not aligned with future strategic goals. Divestitures will also allow these MNC’s to clean up their balance sheets -  in other words, “free up cash.”  The reassessment of these portfolios has generated tremendous opportunity for middle market companies that are strongly positioned financially. Look for this divestiture trend to continue in 2010.

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