Despite Credit Market Woes, Generational Equity Executives See Strong 2008 for Closely Held and Family Business M&A

Strategic Buyers and Private Equity Buyers ‘Going Downstream’ Seen Sustaining Demand

DALLAS, Nov. 27, 2007 – Generational Equity, an advisor to closely held and family-owned businesses for mergers and acquisitions, announced it was the first-ranked financial advisor for U.S. M&A transactions valued at less than $25 million, according to a league table generated with data from Thomson Financial for the period Jan. 1, 2007 through Oct. 31, 2007. These rankings represent transactions in which a financial advisor was engaged and the value was disclosed.

“Our top ranking reflects our ability to provide valuable advice to our clients and close deals on their behalf,” said Ryan Binkley president of Generational Equity. “Looking forward, despite credit-market turmoil roiling the merger-and-acquisition waters, the outlook for closely held and family-owned businesses appears strong.”

Binkley and Dwight Jacobs, executive vice president of Generational Equity, cite two positive consequences to credit-market turmoil for business owners considering selling: Strategic buyers are returning to the market, and private-equity investors are more interested today in making smaller transactions.

Strategic buyers flow in

While credit concerns and Wall Street volatility have lowered valuations of companies large and small, the valuations of smaller companies have tended to decline less in percentage terms, primarily because they typically don’t carry as much debt as larger companies.

“While declining values may seem like a negative for business owners, a silver lining exists,” maintains Jacobs. “Declining values have led to a return of strategic buyers — that is, companies looking to expand in the closely held M&A scene. A steady flow of strategic buyers has stepped back in because pricing has become more reasonable. We see this trend continuing in 2008.”

Private Equity going downstream

In previous years, many private equity firms would not consider investing in companies with values under $100 million. With less credit available to finance larger transactions, the lower end of the middle market is looking more attractive.

“We’ve seen a marked increase in the number of private equity firms interested in companies with values below $50 million,” says Jacobs. “These smaller firms are both easier for them to acquire and offer more upside potential now.

“Big deals usually require complex financing structures involving institutional investors, but with smaller companies this isn’t an issue,” he added.

For sellers, planning is key

“Regardless of the economic environment, the No. 1 concern for sellers should be their financial situation,” Binkley notes. “The outlook for selling any business improves greatly if the owner has planned for the sale for some time. It can take one to three years to address the factors involved in attracting the right buyer at the right price.”

These factors can include analyzing the business’ historical financial performance, developing sound financial projections, substantiating and quantifying the intangible value of the business, and making needed changes that will maximize value.

“Companies that have planned their transition strategy in advance are in good shape and their values are holding up reasonably well. Given the quality of the companies we’re seeing, the backlog of inventory and the interest from private equity, we anticipate a strong year for closely held and family business M&A activity in 2008,” Binkley concluded.

About Generational Equity

Generational Equity, a Generational Equity company, assists closely held and family-owned businesses in completing mergers, acquisitions, recapitalizations and strategic growth initiatives. Generational Equity has more than 300 professional advisors and affiliates nationwide and is headquartered in Dallas, with affiliate offices in New York, Chicago and Irvine, Calif.  For more information, visit www.generationalwealthandequity.com.