You may be asking yourself “Is this the right time to sell my business?” Well, the answer just may lie in the condition of the capital markets. When the capital markets dried up during 2008 and 2009, the percentage of equity in completed transactions hit levels not seen in years.
In order to purchase good, quality companies, buyers were contributing more and more of their own cash to the deal. In the second quarter of 2009 we saw average equity contributions reach near 60%. The balance of the deal structure was usually a combination of senior and mezzanine debt. These high levels of equity contributions were a direct result of the limited capital available in the market. As lending has slowly improved, we are now seeing the blend of debt to equity more equally balanced.
The April Middle Market Pulse provides a great snapshot about how lending levels effect M&A deal flow, so read the entire article now.
Posted by Peter Heydenrych.