Anxiety & optimism: Colorado M&A activity solid in 2012 but not roaring.

• Author: Lewis, David
• Position: M&A REVIEW - Mergers and acquisitions

The Colorado mergers and acquisitions market was mocked, rocked, socked and shocked right out of its jockstrap in 2007-2008. If financial markets had a heart it would have stopped then.

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But by 2009, M&As were turning back up again. Not up to the deal numbers of the bubbly mid-2000s. but nationwide steadily turning out about 2,500 transactions per quarter, and roughly 90 lo 109 in Colorado. The funny thing is that both conditions linger in M&A markets today: anxiety and optimism, cheer and foreboding. Like that.

The mergers and acquisition market is like sitting down to a big Italian meal an aperitif, followed by antipasto, polenta, broccoli, salad, lasagna, fruit and cheese, dessert but you already have heartburn.

The good news is - if you are a business owner reading this--it is a seller's market and multiples for solid businesses are high.

"Volume is significantly up; it really started to pick up in 2010 or late 2009 as banks started more aggressively lending, and that's been driving a lot of my practice," says Nate Ford, Denver-based partner in the Perkins Coie law firm. "Capital is plentiful and cheap right now and so there's money available to pay higher prices."

Companies that survived the downturn, or maybe even started after the downturn, "have done quite well," says ford. "You have a lot of really good companies that are being sold at high multiples; you also have a lot of capital to spend."

Plus, Fortune 500 companies have roughly a ton of cash on their balance sheets still--for acquisition capital, and despite a slack third quarter for them, "many of the private equity funds that were raised just before the crash had a few years there where there just weren't that many investments lo be had, and now they're feeling the pressure lo invest the capital that they have been sitting on," Ford says.

"However, there's still business risk," Ford notes, as well as lots of other kinds of risk.

"We have come out of the economic recession to the point where there is more stability." says Doug Wright, partner in the law firm of Faegre Baker Daniels in Denver. "The economy is stronger but it isn't sufficiently stable for various reasons for the M&A market to come roaring back."

And that in a nutshell seems to be the problem with 2012. It has been a good year, for some even a great year, but 2012 still didn't, live up to expectations. So it's a little bit of a downer.

"The M&A markets crave certainty, and there has...