The current recession in the U.S. has created a range of opportunities and difficulties for most mid-market companies. While some have tightened their belts as taught as possible to weather the downturn others are using stronger positions to their advantage to take market share or complete acquisitions. In both of these cases the highly coveted and valued resource today called “capital” is needed to successfully execute either strategy.

During these unprecedented economic times, the use of an ESOP can provide business owners a unique path to liquidity and increase the cash flow of the business. The goal of liquidity is a challenge in today’s market due to stricter underwriting standards by lenders and buyers cautiously approaching acquisitions.

While the current economic environment and financial market meltdown have most business owners focused on conserving cash, controlling/reducing headcount and holding on for dear life, most of the wealthiest individuals in the world (including Mr. Buffett) will likely tell you that it is in these uncertain times that fortunes are made. Our belief is that this is true for distribution and industrial businesses that have the capital and courage to pursue strategic acquisitions in 2009. Valuations have meaningfully decreased and most of the attractive factors of the distribution marketplace remain – it is a large, diversified and growing market with considerable consolidation potential. A similar situation presented itself after the 2001/2002 slowdown and many distributors benefited handsomely from well-timed, highly strategic acquisitions.

Holman vs. Commissioner, 130 T.C. No.12 (May 12, 2008), is an interesting case chock full of issues. The court considers whether the transfer of assets constitutes a direct or indirect gift, whether the LP should be treated as analogous to a trust, whether the LP passes the tests of 2703(a) and whether the valuation presented is appropriate. Some issues are addressed in more creative ways than others. One of the most creative is the analysis of the valuation discounts applied.

Orlando, FL – PCE Investment Bankers announces the recent recapitalization of Crane Rental Corp., one of the country’s leading crane rental, hauling and rigging services. The partnership with Hammond, Kennedy, Whitney & Co. Inc. (HKW), a private equity firm, will enable Crane Rental, a family-owned and operated business, to continue to expand and grow in response to increasing demand.

The economic slowdown continues to provide challenges and opportunities to distributors of all descriptions. While a limited group of distributors have proved to be immune to the current downturn, by and large most participants within the marketplace are affected by an uneasy environment. With no signs of the weakness abating, it is critical to consider all options available to most successfully maintain and/or add value during these turbulent times.

Businesses and CEOs require tested, reliable input from outside sources to remain at the top of their game. The best performing businesses receive spot-on advice from trusted sources in the form of boards. Creating the right blend of experience and personalities on a board is not easy because boards come in a variety of packages.

There are times in our lives when we look back and speculate “if only I had.” For many of us those regrets seem to focus on timing-related opportunities such as “if only I had invested in Microsoft in 1992” or “if only I had sold my business last year.” While the M&A activity is healthy, in terms of estate planning, owners of privately held companies may have an wealth transfer opportunities at lower values using low interest rates, and avoid looking back and seeing the “if only” moment.

We are apparently heading ‘Back to the Future’ based on the first quarter M&A transaction results of 2008. While merger and acquisition activity is down in both value and volume over the last twelve months, when compared to 2004 the activity remains quite respectable. However, the trend over the last four quarters would indicate that we could see a further drop in M&A activity. The general consensus is that we are either in or headed into a recession (data released this week indicates a modest 0.6% growth rate for 1st quarter 2008). The sub prime mortgage contagion continues to spread; foreclosures are up; banks are scrambling for new capital; access to loans is restricted; all of this is forcing nearly everyone to pause.

Florida is home to the largest number of independent maintenance, repair and overhaul (MRO) companies in the United States. While mega-deals such as Dubai Aerospace Enterprises’ acquisitions of SR Technics, Standard Aero and Landmark Aviation garner press attention, smaller MRO companies are being acquired at record levels with scarce media attention. In this issue we take a closer look at this interesting segment.