30
Mar

Be patient. Deals will make a comeback…in 2010.

Posted by: AmberRoberts in: Financial Services -

During a media interview today, an experienced private equity firm partner made a prediction about when we’ll see deals begin to happen again. In a nutshell, the current market has public valuations down approximately 50% and sellers won’t sell for today’s market prices. So M&A isn’t happening. But this investor believes that the more companies trade at these levels, the more sellers will realize it’s necessary to sell at this level. He based his prediction on his experience doing deals in the software industry during the tech bubble in early 2000 which resulted in a “dramatic reset”…
• Software industry had a reset in 2000-2002, similar to the reset we’ve seen;
• After the March 2000 market crash very few deals took place for nearly two years;
• Not until the latter half of 2002 did the deal stream really begin to pick up and then it grew from 2003 – 2007.

So according to this, if Q4 2007 was our breaking point to start this “reset”, deals should begin to pick up again in 2010.

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