Merger and acquisitions transaction activity dropped slightly in the third quarter of 2010 after a strong second quarter performance, almost solely to the decrease in under $50 million transactions. The decrease in activity is somewhat surprising given reports that financial and strategic buyers across multiple sectors are reporting an uptick in deal flow. Business owners seeking liquidity prior to the upcoming change in tax laws is one reason given for the increased deal flow activity. Hopefully the drop is a minor blip that will be offset by significant activity in the 4Q10. Even though activity was off slightly in 3Q10, total transaction volume in 2010 has surpassed the levels achieved during all of 2009. Through the first three quarters of the 2010 total transactions equaled 8,480 versus 8,325 for all four quarters of 2009. This achievement is certainly encouraging considering the challenges 2009 presented, but additional progress will need to be made before a healthy M&A market is achieved.

Merger and acquisitions transaction activity picked up in the second quarter of 2010. The increase is due to a number of factors. Deal momentum improved as the economy continued to show modest signs of improvement, debt markets became more active and valuations remained strong for companies that performed well. Additionally, a segment of business owners are motivated by pending tax law changes that will increase taxes and lower net proceeds after 2010, unless there is an extension of the Bush tax cuts. As a result, companies are evaluating liquidity alternatives resulting in the uptick in transactions. For companies that are performing well this is a good opportunity for shareholders to maximize the proceeds from a sale.

In spring 2010 I addressed the difficulty of obtaining credit. A friend had asked about the current environment so I am sharing my thoughts with all of you. Hard to believe that so much time has passed so quickly since I last wrote about credit. Before you know it, the year will be 2020, and we will have emerged from these economic shackles of debt and unemployment. But back to the issue at hand – credit availability in the current economic climate.

There have certainly been better days – and even better years – for the nation’s construction industry. But extended periods of strong growth have turned sluggish making a once vibrant industry fall back to levels not witnessed in nearly a decade. As economic conditions improve, construction is sure to take off again but how soon that will happen is the question on everyone’s mind.

Healthcare remains one of the nation’s most vibrant and vigorous sectors, creating some excellent opportunities for mergers and acquisition (M&A) activities.

What a difference a year makes. Flashback to the ACG Intergrowth convention in May 2009, when the mood of the Private Equity (PE) community seemed as somber as a mortician’s convention. Fast forward one-year later to this year’s event and the PE world is abuzz again with bullish sentiment and overall feelings of optimism and hope.

Part of the answer is the banking issue of “Too large to fail” changing to “Too many to fail.” Community banks are still struggling with the effects of the Great Recession. The large loan charge-offs and substantial additions to loan reserves are depleting their capital reserves. In most areas, community banks represent approximately 50% of bank deposits and loans. Therefore, their health has a direct impact on the ability of local businesses to obtain business credit.

Multiple market indicators are sending signals that make this a good time to consider selling a business. Some of those sound, fundamental reasons are outlined below:

Nearly every industry feels stressed from current economic conditions but none has suffered more than construction. The federal stimulus plan was expected to offset declines in new construction but the projects funded have been slow to come to fruition. As a result, construction and construction related companies that enjoyed an extended period of significant capital expenditures now struggle with high debt payments while revenues, profits and cash flow continue to decrease. Compared to 2008, bankruptcy filings for construction companies increased by over 100%.

After a challenging start, 2009 ended with some positive momentum. Expectations going into the year were low due to the severe economic downturn experienced at the end of 2008. As the year progressed the M&A markets became more comfortable with the state of the economy and the initial stages of the recovery. During 2009, activity improved leading many to believe that 2010 has the potential to be a better year for M&A transactions. Additionally, a new report from Towers Watson and Cass Business School determined that publicly traded companies which undertook acquisitions in 2009 outperformed the market, providing evidence of the value acquisitions offer.