"Last quarter we reported that 71% of completed deals in 2009 to date were in above-average performing companies," said Andrew Greenberg, CEO and Co-Founder, GF Data Resources. "Now, the data is telling a different story. For the first time this year, private equity firms in the GF Data Resources universe are reporting more activity among selling businesses with less-strong financial characteristics, and these businesses are accepting greater discounts in multiples. This lends support to the impression in the deal community that many business owners are revising their pricing expectations in order to sell their businesses."

"Given the long lead time in putting a deal together, most of the transactions closed in the third quarter were probably started at the beginning of the year.  That was a period of great financial uncertainty and only a few companies were willing to entertain a sale process unless they were in financial distress that reqiured a sale," said Doug Hendrickson of MidCap Advisors..

The GF Data Resources report is based on data provided by 130 participating private equity firms reporting on transactions valued between $10 and $250 million.  The report shows an average multiple of 5.1x in Q3. Private equity firms contribute confidential deal information to GFDR and the aggregated data is shared with its contributors and subscribers.

"The data reflects a continuation of most of the trends reported throughout 2009, along with some subtle but important shifts in the middle market deal environment," said Graeme Frazier, Principal and Co-Founder, GF Data Resources. "Deal volume remains tepid, and the best properties are still benefitting from a flight to quality and appear able to resist pricing discounts. However, the Q3 data indicates more deals getting done involving non-exceptional properties. This suggests that businesses with lesser margins and growth rates have begun to adjust their valuation expectations and complete deals at lower valuations. It sounds like a lot of doom and gloom but the closing of the gap between seller expectations and valuations could signal a return to more deal activity in 2010."

GFDR collects, analyzes and reports on private equity-sponsored M&A transactions in the $10 million to $250 million value range. GFDR's quarterly reports contain high-level valuation and leverage data. The firm also provides detailed valuation data in specific industry categories through its web site www.gfdataresources.com.