Dealmakers: investors seeking higher returns drive demand for Indiana companies.

• Author: Hromadka, Erik
• Position: FINANCIAL SERVICES - Industry Overview

"RIGHT NOW IS ONE OF the best times ever to sell your business," say Robert V. Welch Jr., senior vice president of corporate finance at City Securities in Indianapolis.

The combination of low interest rates, increased bank lending and a growing number of private investors seeking higher returns on their money is driving both demand and prices for business deals.

Welch has a good perspective on those deals from the state's oldest investment-banking firm. Founded in 1924, City Securities typically targets companies selling between $5 million and $100 million.

According to data from Thomson Financial, there have been more than 100 sales of businesses in Indiana this year, ranging from large deals like WellPoint and Republic Airways making strategic acquisitions that bolster their insurance and airline operations to smaller private companies being purchased by investors who hope to realize gains by reselling the assets.

In addition, two public offerings of stock have taken place in southern Indiana as Accuride, an Evansville manufacturer of commercial truck wheels and components, and marine transportation company American Commercial Lines of Jeffersonville joined the list of Indiana'a publicly traded companies.

A significant factor driving the increase in deals is money coming from private equity funds that are seeking higher returns than the stock market has been generating, says Welch. At the same time, a stable economy and low interest rates have made banks willing to provide funding for deals in a wide range of industries.

The key to successfully completing deals is finding companies that have good management teams, solid business plans and established profitable operations, Welch says. He sees strong buying interest in the areas of real estate, health care and light manufacturing with an upswing in financial services, agriculture and producers of raw materials.

"If you want to get the deal done and you want to get it done well, you need to hire a good advisor," Welch says. "It can take over a year to close a complex deal." He points out that mistakes early in the process can often derail a potential deal or prevent it from reaching its business potential. Taking the time to plan and implement a strategy that allows a smooth transition between owners avoids those problems, says Welch.

Scott Brown, president of Key Bank Central Indiana operations, estimates that deal making has increased by 20 percent in the past year and attributes part of that growth to a rebound in mergers and acquisitions that did not happen in recent years.

"Over the last few years the M&A market has...