Private Equity Firms Searching For Smart Deals in the Middle Market

San Diego - April 08, 2008

Private Equity Firms Are Searching For Smart Deals in the Middle Market as M&A Activity Reaches a Four Year Low

According to a recent editorial from CNBC and the Financial Times, the worldwide volume of mergers and acquisitions (M&A) fell to its lowest level in four years in the first quarter of 2008 as the credit squeeze and market turmoil continues to put a brake on deal-making activity. According to Deborah Larrison, Citi Capital Strategies, investors will be more careful in who they lend too, and private equity sources and firms will be more apt to conduct due diligence on their target companies. Additionally, while the attention has historically been focused on the larger deals, there continues to be growth and opportunity in the middle-market arena, deals under $500 million.

According to recent Securities Data Company statistics, of all M&A activity worldwide, over 85% has been in the under $500 million deal space. There continues to be a large volume of deals at lower per deal transaction amounts, allowing firms to spread their investment risk across a variety of smaller deals versus taking the risk of one large deal succeeding. Therefore, due to the current market space, it is important to be strategic in what deals companies pursue.

Bainbridge is well-versed in the M&A marketplace, particularly in the middle-market. Through primary-source research, the firm's teams are able to identify hidden niche markets and new industries and conduct careful due diligence, ensuring that clients are pursuing well-explored investments. Beyond due diligence and market studies, the Bainbridge team of experienced M&A Analysts is able to find target companies that match the investor's criteria, often making clients the bidder of first choice. Working as an extension of a private equity firm's development team, Bainbridge is able to create proprietary deal flow outside of the auction environment for its clients coupled with careful due diligence, creating a well rounded investment strategy.

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