For companies with valuations less than $100 million, deal volume for the first half of 2009 was down 58% compared to 2008 as reported by the Alliance of Merger & Acquisition Advisors (AM&AA).

Those numbers don’t sound like good news for company owners who are ready to sell their companies, but that’s past.  The question is, what is coming?

While the history is dark, the silver lining is in the external market factors, like these:

• Strengthening public stock market values are waking up strategic buyers who need to make acquisitions to grow
• Low buyouts over the last 18 months mean that private equity investors are more hungry than ever to put their $400+ billion of uninvested funds to work by doing deals
• It is beginning to look like the worst of the recession may be behind us
• Valuation multiples, reported by AM&AA at 4.7X EBITDA can only go up

The market for under $100 million companies has always been cyclical.  This may indeed be the bottom and we are in the beginning of the upswing.

posted by John Hammett