Much has been written about the collapse of the subprime market and the pullback of private equity leveraged buyouts. While there is certainly truth to these concepts as evidenced by some recent multi-billion dollar busted deals such as Acxiom, the middle market M&A market remains very active. Public company valuations remain strong as the stock market continues to move upwards and middle market private equity firms remain flush with cash. Lenders have gotten somewhat more cautious so there may be some slight reductions in value as private equity firms cannot borrow quite as much as they could earlier this year. Certainly there is more equality now between private equity and strategic buyers.

Company owners are still experiencing solid business performance and strong valuations in the market. Additionally, many people speculate that a change in administration in the 2008 election could bring an end to the 15% Federal capital gains tax advantage. The prospect of having to pay an additional 15%-20% in taxes is encouraging some company owners to explore a sale more aggressively.

© 2007 Childs Company