Outlook for 2011

However, a number of positive economic indicators are driving good news in the business press. Chief among them: Equity markets have rebounded nicely over the past 18 months from the nadirs of March 2009, including the Dow and the S&P, in both large and small cap stocks. Likewise, U.S. manufacturing has seen genuinely encouraging signs of improvement, as the Purchasing Mangers Index (“PMI”) has scored a 50+ over the past 17 months, reflecting growth and expansion within the manufacturing sector. Since PMI monitors new orders, production, employment, supplier delivery, and inventories (per the Institute of Supply Management), it nicely reflects core manufacturing activities and sentiment.

Optimists ' including the vast majority of my fellow investment bankers ' point to unprecedented high levels of liquidity in the U.S. capital markets, including corporate cash balances as a percentage of total assets in excess of 7.4%; according to the Federal Reserve these levels not seen since Eisenhower was president. According to international data supplier Prequin in October 2010, Private Equity Sponsors have more than $400 billion in funding that needs to be committed before the end of 2013. Flush liquidity means strategic and financial buyers are highly motivated to put that cash to good use, and the volume increases over the past two quarters in M&A activity have been impressive as a direct result.