Don't look back: Colorado's M&A world slows down this year.

• Author: Caley, Nora
• Position: Mergers and acquisitions

For mergers and acquisitions professionals, fourth quarter 2012 might seem like a lifetime ago. That was when buyers and sellers of companies rushed to finalize deals before Jan. 1, 2013, when the Bush tax cuts for capital gains were set to expire. According to private equity and venture _capital research firm PitchBook, fourth quarter 2012 set a record. for the middle market ($25 million to $I billion) with 413 deals nationwide. The number dropped to 225 in the first quarter of 2013.

In Colorado, industry experts say there will be no such frenzy this year-end.

"I don't think activity is going to be as robust in fourth quarter 2013 as it was in 2012," says Warren Henson, president and senior managing director for the investment banking firm Green Manning & Bunch Ltd. "We are going to see deals that, if they are not done by the end of 2013, they may go into 2014. There is not as much of a driver to finish them as there was last year."

The pace has slowed for another reason as well. Henson says he is seeing much more emphasis on due diligence these days. Deals that used to take six to nine months *to close can now take nine to 12 months, as some buyers have become risk averse.

Activity remains quiet, according to Nate Ford, a partner in the private equity merger and acquisition practice at the Perkins. Coie law firm. "It's counterintuitive because borrowing costs are low, but people are pulling the trigger only if it's an absolutely great deal," he says. "There is a lot of competition for those good deals. We are shocked at the multiples people are bidding."

According to Pitch Book, in the first half of 2013 valuations for middle-market deals hit a decade high of 10.5 times EBITDA. In 2012 it was eight times EBITDA.

Ford adds that some industries, such as health care, are especially strong. With the Affordable Care Act going into effect in phases, companies that create efficiencies or better outcomes are getting attention.

Oil and gas is also drawing notice. According to PricewaterhouseCooper's Oil & Gas M&A analysis, in the first three quarters of 2013 the Rocky Mountain region saw 21 deals for a total of $11.9 billion. That is down slightly compared to the first three quarters of 2012, which saw 23 deals for $12.9 billion. PwC's quarterly report, which tracks deals valued at more than $50 million, also noted that third quarter 2013. had five deals for a total of $2.2 billion, down from 11 deals for $7.5 billion in the second quarter of this...