"How is Deal Flow?"

I must get this question at least ten times a week. Probably because it's an easy ice breaker but also because folks in our industry realize we are probably a fair barometer of what's happening in the small deal market. 

The answer is, "Pretty good." In the first six months of 2011, we reviewed 15% more acquisition opportunities than 2010. We also have closed two new acquisitions as well as one small add-on acquisition, a significant increase over 2010.

While we don't have any specific insights on why deal flow seems to have picked up, we have seen some trends developing this year:

-  Business owners that have wanted to sell but have been waiting for the economy to improve have entered (or reentered) the market.

-  Valuations may have marginally improved over the last year or so.

-  The difficult lending market for small business owners is preventing them from getting the financing they need and so they've been exploring other options.

PDW