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The September 2011 issue of Mergers & Acquisitions (published by ACG) had an article that stated it is not the lenders who are holding up activity in the small deal space. They wrote that banks were out of the market for quite awhile (who could blame them in 2009?) and have a pent up demand.

Another factor is that there just aren’t that many loans to make (transaction and other types) so every potential deal is a priority. Of course, it has to be a good deal meaning stability, growth and adequate debt coverage (profit to debt payment ratio).

When I hear people say that banks won’t lend or, better yet, that it has to be a really good deal to get a loan, I smile and move on. Of course it has to be a really good deal because banks are in business to get paid back. I own stock in a community bank and I like it when they make good loans.

The biggest factor that will translate into more deals is for buyers and sellers to both realize three things:

  1. The current economy is what we will have for a few years. Don’t sit back waiting to ride the recovery wave.
  2. There aren’t as many buyers as one would expect in a down and turbulent economy. So, take what you can and take action.
  3. Banks will lend money for a good buy-sell transaction. It is not the banks holding down the activity.

“It’s always a good time to buy a business” Richard Parker


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