If you’re a small business owner looking to recap or sell your business in the next 12 – 24 months, things may be looking up for you.  Strategic Advisors in Pittsburgh has put together a nice recap of the current state of middle market transactions.  Here are some highlights:

Middle market deal leverage averaged 3.3x EBITDA in 2009.  This is compared to 4.7x in 2008 and 5.6x in 2007.  Obviously a HUGE percentage decline but not bad considering . . .

Deal valuations averaged 6.1x EBITDA in Q4 2009 compared with 5.9x and 4.9x in Q3 and Q2 respectively.  Clearly an improvement but remember, only really good deals are getting done at these multiples.

Private equity deal flow decreased significantly in 2009.  PEF’s did $43 billion worth of deals in 2009 compared to $200 billion in 2008 and $575 billion in 2007.

Companies with weakened cash flow but with strong assets (AR, Inventory, and fixed assets) have been switching to asset-based loans and away from traditional bank financing.

Banks continue to hold onto their money.  Senior debt in a typical deal averaged only 2.7x EBITDA in 2009.  Sub-debt lenders and owner financing are filling the gap between senior + equity in a typical deal.

Read some of our posts on how to prepare your company and valuation if you’re thinking about making a move in the next 12 – 24 months.