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42% are looking for an investor

Michael Knoll
Partner, Head of M&A Lead Advisory / Corporate Finance
4 December 2008

The results of our poll confirm what we have been observing over the past few weeks. Given that the credit markets continue to be more or less closed, businesses are turning to equity to either refinance part of their loans or attract cash to further the growth of their business.
Generally speaking, there is more than enough cash around, but the competition for capital is much stiffer now. This means that, compared to six to 12 months ago, entrepreneurs and businesses currently looking for capital need to be better prepared when attracting investors. To do this, they need to ensure that the sell-side process is run professionally.

One aspect that businesses must be aware of prior to entering into a sales process is that price levels have changed across all industries. The extent to which they have changed depends on their respective industry. Currently, the food and beverage industry as well as the medical industry are faring well.

On the other hand, we are also seeing that some Russian companies and entrepreneurs as well as foreign strategic and financial investors (rich with cash) perceive the current market environment as a good opportunity to expand into markets or develop existing businesses.

Overall, my day-to-day experience shows me that it is still possible to secure cash, but for the most part only in the form of equity, and that companies striving to do this need to be much better prepared than in the past.