Increased M&A activity continued through the third quarter of 2007, as capital availability to fund transactionsremained strong and total debt-to-EBITDA hovered around 5.1x for LBOs with less than $50 million in EBITDA, up from 4.5x the prior year.

Today, however, we are constantly inundated with news of mega mergers and acquisitions being reevaluated orcancelled altogether due to the tightening credit market. Economists blame subprime woes not only for disruptionsin the mortgage market but also for the slowing of activity in large-cap transactions. Major banks have found itdifficult to syndicate several hundred billion dollars of leveraged loans and so have reduced the amounts theyare willing to lend for new large-cap deals. Even with the drop-off in large-cap transactions, several notable deals occurred throughout the country, and these deals helped fuel the excitement for M&A in 2007.

Download the complete Market Update — Third Quarter 2007.