“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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More and more I am seeing creative deal structuring in today’s M&A market.  This comes as little surprise.  The credit markets remain quiet; companies are not growing their way out of financial stress and smaller firms often finding themselves squeezed by larger companies who offer more products and better terms.

So what is a small to midsized business CEO to do?  One suggestion us to align yourself with companies where you do not share the same customer (no need to fight over scraps) and find companies that add value to your offering and aggregate the products and service for your customers.  In some cases we are advising our clients take minority positions in critical companies. In others, we advise acquiring a majority position and in others we are structuring subcontracting agreements.  There is no silver bullet, but the key is to have some weapons on your side that can differentiate you - particularly from your fretful competitors who are paralyzed.  Keep in mind I think you are going to have a lot more buying competition in 12 to 16 months.  Time is becoming of the essence.

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