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There are several reasons a business owner plans an exit including retirement, liquidity, lack of generational succession, and diminished competitive position to name a few. All things considered, one could make a strong case that 2013 represents the optimal value for many middle market businesses. Current favorable M&A conditions include, but are not limited to:

Availability of Financing – Senior financing creates a solid base of lower-cost debt for buyers to begin building the capital structure and ultimate purchase price for the transaction. For middle market companies in the U.S., current senior debt to LIBOR spreads are competitive and senior debt / EBITDA multiples were 2.2x in Q1 of 2013.

Positive Financial Trends – Many businesses show an attractive and accelerating trend of financial performance from 2009 to current date, which can assist in the creation of a compelling growth story.

Competitive Marketplace – Financial and strategic buyers are very active, which creates a highly competitive environment that drives value for sellers. Aggregate M&A transaction value for U.S. companies in Q1 2013 was $222.7 billion, up nearly 61% compared to $138.6 billion over the same period in 2012.

Historical Market Cycles – The M&A market is highly volatile and cyclical with three to four years separating peaks and toughs and six to seven years to span a full cycle. The most recent bull cycle peaked in 2006-2007 and the market trough was last seen in 2009-2010. Given the acceleration through 2011-2012, 2013 could be an optimal period for an exit.

If you are considering a purchase, sale or recapitalization of your business, please contact a member of our firm’s Transaction Services Group at 586-254-1040 or contact your local UHY LLP professional.