Compass Report--The State of M&A

From 1997 to 1998, the open window admitted mosquitoes, roaches and butterflies. In 2000, the window of opportunity for selling is open only to butterflies. The window will accommodate only high-performance companies with superior managers who wish to stay on duty.

In most instances, these companies must have sales in excess of $10 million and EBITDA margins well north of 10 percent. Preferably, these companies should have a top and bottom line growth plan, and managers who can explain it. The equipment should be reasonably new and there should be no major capital expenditures on the near-term horizon. The sign on the consolidation window reads, "We buy no futures. Turnarounds and workouts not admitted."