As the third quarter of another strong year for mergers and acquisitions draws to a close, executives at middle-market companies are wondering how long this hot market can persist. People also want to know what signs they should watch for that might presage a cooling of the market. For this month’s Viewpoint, we look at both of these important questions.

The buyout deal environment in 2006 continues to be extremely competitive, with transaction multiples climbing to an average deal multiple of 8.6x earnings, according to Standard & Poor’s Leveraged Commentary and Data. If multiples continue at these levels they would eclipse 2005’s average 8.2x multiple for PE deals which is currently the highest year on record.

Imagine you’re meeting with executives from a company that are interested in acquiring your business. What would you tell them about your company to convince them that they should buy it, and furthermore, that they should pay the price you have in mind, not the lower sum they were thinking of offering?

M&A activity has continued unabatedly through the summer, keeping 2006 on track to be one of the best deal years in recent memory. However, as an indication that availability of capital and high levels of M&A activity might be impacting ...

You receive a call from the largest player in your industry. They want to “preemptively” acquire you and begin asking for detailed information about your finances, your operations and your people. As you look through their information requests, one thing becomes very apparent: As a small, entrepreneurial business, your processes, policies, controls and reporting are adequate but through the eyes of a large acquirer, there are a lot of unanswered questions and “holes” in the information.