Although the pace of mergers & acquisitions activity has slowed, and the highly leveraged deals of the past few years have disappeared, large companies continue to seek growth through strategic acquisition, private equity investors still have capital to deploy, and private owners are looking for timely exit strategies.

Valuations are still strong for high-quality companies. Demand still exists for businesses that can demonstrate growth, profitability and a solid product/service. True, you won't find ready financing with lenient covenants, and leveraged transactions are requiring 40%-50% equity, but most strategic buyers in our markets are healthy, qualified and willing to pay cash.

Over the next 12 months, we expect that many highly leveraged but otherwise sound companies will be forced to come to market. While we don't anticipate a flood of these deals, they will bolster overall middle-market M&A activity in 2009.