Although the mergers and acquisitions market is still not close to previous highs, sales activity continued to come back in the third quarter, says the regular report from PCE Investment Bankers. The rebound was largely expected, due to pent-up supply from the many business owners who’ve been sidelined during this past year, forced to wait-out the economic crisis until credit and other markets improved. They find “a number of interested buyers are only committing to high-quality deals that serve a strategically important purpose, or [ones that] will provide a superior return,” says PCE investment banker Mike Rosendahl.

In particular, the greatest increase in transactions took place in the lowest and highest value segments. Deals with an enterprise values less than $50 million increased 10.4% from the 2Q09 to 3Q09, while transactions over $250 million increased by 80.4% over the same period. The “dramatic” increase in the latter segment is related to the substantial increase in strategic transactions, according to PCE. Compare these results to transactions for companies with values between $50 million and $100 million, which decreased 3.6% from 2Q09. Likewise, transactions between $100 million and $250 million dropped 20.9% during the same time frame.

“While [overall] activity continues to increase, there is still a chasm between buyer and seller value expectations,” Rosendahl reports. With a little more time, however, buyers and seller should find the necessary clearing price and the outlook for M&A should brighten. “Expectations for the 4Q09 and 2010 are improving as strategic and financial acquirers aggressively seek out new targets. Sellers are also carefully reviewing their alternatives as more business owners contemplate their exit strategy. The confluence of these factors will lead to a substantial increase in transactions, but the effects most likely won’t be seen until we are further into the economic recovery.”