The recession has driven down the volume of transactions and hindered the ability of many companies to pull off deals. Lower profits, a gulf between buyers and sellers when assessing a company's value, greater difficulty in getting financing and lenders' demands for more equity up front are the main factors in this decline.

What we accountants and business consultants call "the expectation value gap" has widened because of the recession. Put another way, the credit crunch and amount of equity money a transaction requires is driving down company valuations and increasing the gap between what a buyer is willing to pay and what a seller is willing to accept. As a result, the number of completed M&A transactions has fallen sharply. This has led to changes in the structure of transactions due to changes in the value of deals.

Most of the transactions getting done these days are "asset purchases" rather than 'stock purchases," primarily for tax reasons and the fact that buyers of distressed companies are reluctant to take on liability with a new entity.

Regardless, there remains a trend of companies joining a larger firm to spread the cost of technology, marketing and other services over a larger volume of business. And whenever the U.S. economy plunges, investment in the United States by foreign companies usually increases.

In any event, there is good news for fiscally sound companies. Tremendous values exist for the discerning buyer. Some construction and real estate companies view the economic downturn opportunistically. For sound companies, now is the time to strengthen capabilities and gain market share through strategic acquisitions and the addition of talented employees.

-- Tim Bryant