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It's Particularly Juicy In The Middle

As M&A heats up in 2005, midsize companies are prime targets

By Staff Writer | Updated on February 01, 2005

Bankers and investors are looking forward to another bumper crop of mergers and acquisitions in 2005 as the healthy economy and accumulated cash encourage market participants to harvest targets judged most ripe. And while deals that make headlines tend to involve multibillion-dollar companies, such as the match-ups of Sprint and Nextel or Kmart and Sears Roebuck, some data suggest that the companies most alluring to buyers today are those in the middle market.

A study by Brown Gibbons Lang & Co., a boutique investment banking company that specializes in the middle market, shows that in the first nine months of 2004, the average valuation for companies with revenues between $250 million and $500 million rose to a multiple of 9.9 times, up 39.4% from the average valuation of 7.1 times for companies that size in 2003.

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