Should I Sell or Should I Grow?

Dec. 10, 2004--Though the hangover from the bust still lingers through investment firms, the mid-level market ($50-$100 million) is looking ripe with potential from Mid-Atlantic region.

"Many of the banks in our region are flush with funds, but the number of good companies out there isn't proportionate," Robert E. Brown Jr., managing general partner at Meridian Venture Partners, based just outside of Philadelphia, said. "The banks want to put their money to work again and it looks like '05 is going to be a good year for that."

Brown pointed to the usual indicators: low interest rates; a healthy, swelling economy; and also adds that with the election behind us, and the holiday season nearing its end, things will be returning to normal.

"The market is coming back," Judith Radler Cohen, an editor at Merger & Acquisitions Report, a weekly update on the market, said. "The last three years have been really slow, but things are looking good."

It also may be a good year to sell, according to Brown. "Of course the bankers are going to love me for saying this, but if you're company is cash-flow positive and has potential, it's a great time to sell," Brown said. "Get, while the getting is good, is going to be the market attitude."

Brown remains hopeful despite a sluggish '04 market--as of November there had been just under 2,700 reported mid-level transactions year to date, a meager .06% increase over last year. However, Brown points to a solid capital gains rate of 15% as a great indicator for future growth. A report put out by Robert W. Baird & Co. also points to real GDP growth of almost 4% for the year, with projections coming in at 3.5% for next year. Plus, with favorable interest rates as well as inflation staying low, the forecast looks good for those looking to sell or grow.

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