Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Bob Ramsey - FBR Capital Markets.
Bob Ramsey - FBR Capital Markets
Philip, you said at the start of the call that, you believe we’re getting closer to finding an acquisition. Is that just because of the passing of time or is there anything tangible, which pops that statement?
Philip Sherringham
Passage of time is certainly a factor, but there may be something else. Obviously, I can’t comment on specifics.
Bob Ramsey - FBR Capital Markets
In terms of sort of IRR hurdle rates, last quarter you all said that you were targeting something in the high-teens. Is that still what you guys are looking for?
Philip Sherringham
Ideally, yes. Having said this, I want to point out that in this environment again the changes in accounting in particular a high-teens today would be significantly higher compared to it what it was two years ago. In other words, an 18% IRR in today’s environment could very well be like 25% two years ago.
As you know, the major difference is, as we’ve explained, I think on the last call, the fact that as a result of FAS 141(R), we are now obligations to markdown the loan portfolio, I mean acquire bank up fronts, which is a significant hit which impacts of course the IRR. Another factor that impacts IRR negatively is of course the multiples that we are not using to value the terminal cash flows of an acquisition.
So one thing I guess is two years ago we produced the content of 20% IRR, but this was pre FAS 141(R) and with higher multiples. So today things have changed a little bit but as a result at 15% IRR, in today’s world, it is going to 20% plus two years ago easily.
Bob Ramsey - FBR Capital Markets
Are you seeing any increase or decrease since sort of the flow of assisted transactions that are being marketed and then maybe outside of assisted transactions, given the reason sort of strength and financials at least since last quarter, are you seeing sellers that are more open to selling at this point at closer to market prices?
Philip Sherringham
Well, first of all we are seeing a significant increase in the flow of assisted transactions; I think that so much in the public domain, but the came in as fast and furious at this point. In terms of, open back transactions it is very much individual situation, every banks different, every potential acquisition candidates has their own issues. What we hope that at some point we wound be able to read on something reasonable.
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