If you look at the divide in the M&A market, the growth you will see is in strategic acquisitions — either very large or very small. Where we can expect the least amount of activity is what I call the wedge: $1B to $10B transactions. This market sector is inherently ripe for private equity. It tends to be less strategic, much more financial, because in today’s environment transactions on this scale are an odd size — they’re not huge but they’re by no means mom and pop. Historically, the private equity players in the financial world would acquire a company in that category and build on it as a platform. They would make a $7 billion acquisition and use it as a platform to build around, creating a bigger company that they can take public or sell to a strategic buyer through a private transaction.
But of course, not much of that is happening right now. The private equity folks are sitting on the bench for one simple reason: credit. This middle sector — the wedge — is where the credit situation is felt most strongly. So this is where you’re not going to see much growth.