”If I knew where to find 200 million euros now, I would have no trouble investing them tomorrow,” says Dragos Cabat, managing partner of consultancy and financial brokerage firm Financial View Consulting, referring to the requests for funding that he gets from his clients. It is true that some of the applicant companies are ”hard to finance”, because they pose a greater risk to investors, Cabat admits, ”but many of them are good companies, with solid business plans.

”The increasing need for cash of the companies the consultant is talking about can be easily explained in the current economic context. On the one hand, the entrepreneurs are faced with an economy affected by increasingly more constraints: flows of cash among partners are choked, payments are delayed, orders and sales are going down, due loans are harder to repay. On the other hand, most bankers are no longer willing to grant them new loans and even reduce the lines of credit they approved in the past. Under the circumstances, the offer of the private equity firms, investors that buy into a company, help it develop with funds and know-how for a while and then sell their stakes for profit, is becoming more and more interesting. For many years, entrepreneurs had been reluctant in accepting the offers of portfolio investors, partly because they were doing well and prospects were good, while a partnership with an investment fund would have meant losing independence in the running of one’s business.

Things have changed now. Even though the economy is going through a rough period, private equity firms are not doing bad at all: whereas in the past years they could miss a lot of deals because entrepreneurs could get loans from banks, today, a series of old talks could be resumed, says Cornel Marian, chief executive of Oresa Ventures, a Swedish private equity fund and one of the biggest in Europe that has been present in Romania for over ten years. Now that bank loans are either frozen or too expensive to get, and the stock market is no longer a solution to raise capital, investment fund managers can afford to be more selective than ever. Beyond the abundance of companies in need of financing, good deals are hard to find and conditions imposed by investors are not easy. The basic criterion is not the price of a company, but the profit that can be made from it in the future.

”No company is cheap enough if it’s a bad company,” says Mihai Sfintescu, manager of 3TS Capital, which operates two funds in Romania, 3TS Central European Fund II (100 million euros in capital) and 3TSCisco Growth Fund III (30 million euros). Although selling their business for a competitive price is very difficult for entrepreneurs now, the funds cannot be sure they will able to sell their stakes for profit in two or three years, either. However, if entrepreneurs (or some of them) are not willing to take a lower price, the investment funds are in no rush, expecting the number of opportunities for cheap deals to increase as the problems of companies worsen. The investment funds that sit and wait for opportunities might find out that they missed out on good deals, especially if the bank financing option becomes available again to entrepreneurs. Or maybe the deals are already happening ”silently”, after all, as Marius Stancescu, chairman of consultant and M&A broker Riff Holding, says: ”The sale is a difficult moment, which can affect the commercial relations with clients or suppliers, with business partners, therefore it is only natural that most such deals should be made behind closed doors.”.