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MA A IGP R N R N GN A T E
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DIFFERENT MONTH, SAME QUESTIONS
THE QUESTIONS: 1. 2. 3. 4. Has the economy bottomed out? Are deals being done? Are banks lending? How are the capital markets doing?
THE ANSWERS/OBSERVATIONS: Some bright spots are appearing in the economy. The question really is, “are we finally seeing sun or just a break before the June gloom”? As I have said before, we will need a global recovery to drive demand domestically, kick-start innovation and put people back to work. Clients are cautiously optimistic that the end of 2010 and the start of 2011 may start a slow but steady recovery. Deals are being done, but are either continuing the trend over the last year of distressed deals or strategic deals. The good news is there is a meeting of the minds on valuation, multiples and pricing. Several clients are actively looking at acquisitions. Deal flow, per conversations with investment bankers, was very steady in the first part of 2010. This did not exist 6-9 months ago. Is it a trend? We are seeing banks lending, but the fundamentals have to be there. In one case we have, a company with significant loss – the first in its history, with a story of quick recovery – is getting interest. Relationships are key to getting the right person at the right bank to look at deals. Capital markets seem to be loosening up some. A client had a major bond refinance four months ago and are considering several clients' IPO’s in the summer/fall. Private Equity (PE) is interested in the “right deals." We have engagements from PE’s for due diligence and PE’s are asking for deals. Tough, yes. Creative thinking, yes. Possible? Absolutely. Relationships and introductions are a must to get the right looks. In summary, the economy will turn, deals will be done, banks will lend and capital markets will rise again. However, rules have changed and old paradigms need to be changed and shifted to be successful. Those who learned from lessons over the last couple of years, adapted and shored up operations and balance sheets will survive. Those that did not will go the way of the dinosaurs. Next month, new questions? I invite your thoughts and questions. Email firstname.lastname@example.org
David Krajanowski, CPA Managing Partner