Middle-market companies are on the lookout for “transformative deals” this year, and that means their bankers have an opportunity to open up a dialogue with their mid-market clients, according to a recent survey by Citizens Commercial Banking.

“I think it falls in line with what we expected,” said Jerry Sargent, Citizens’ head of middle-market banking. “The big takeaway for us is, we’ve been watching this build for a couple of years. We went through this financial crisis, and companies really focused inwardly. They streamlined their operations, they invested in technology, their own capacity, and they slowly regained their former stature.”

“They’ve been operating most recently in an environment that I would characterize as a slower growth environment, yet they’re looking for ways to grow their business faster,” Sargent told Banker & Tradesman.

And that means many of those companies are in the market for mergers and acquisitions as a means to deploy their excess cash more effectively, he said.

Among the nearly 600 firms Citizens surveyed for its Middle Market M&A Outlook 2016, 32 percent are currently involved in an acquisition and another 31 percent are open to considering one. Moreover, 54 percent of upper middle-market potential buyers told Citizens they are more confident today than they have been in the past that growth via outside investment is an appropriate strategy.

“Inherited liability” and “overpaying for an acquisition” topped would-be buyers’ concerns in the survey, Citizens said. Smaller middle-market firms worried about losing key employees during an acquisition, and larger firms worried that market fluctuations could impact deal values.

Meanwhile, the greatest fear among middle-market sellers was being underpaid for their firms. A large majority, 83 percent, of upper middle-market potential sellers said they had been either extremely (25 percent) or moderately (58 percent) affected by volatility in the global economy, and 41 percent said they feared a significant financial crisis in the next three years.

Among potential upper middle-market sellers, 56 percent said they believe asset valuations will stay the same (42 percent) or decrease (14 percent) over the next year.

This all means commercial bankers should be prepared to discuss a range of M&A services with their middle-market clients, from due diligence to financing, Citizens said.

“What we really need to be active with is working with our clients to make sure we’re talking to them about M&A ideas, who are the big competitors, who should you be thinking about, what does it look like if we help you model that out financially,” Sargent said. “I think it’s a road map for us to improve the dialogue we have with our own clients.”