Interesting Data Point: Technology M&A

December 20, 2009

In 2010, technology M&A activity should accelerate as technology firms will look to raise capital, divest noncore assets, wind-down sales increase and acquire rivals to improve competitive positioning.

Interesting Technology M&A data points
§  $1B:  this year, only 31 technology transactions valued at $1 billion or more have been consummated.  This is less than half the level seen in 2005-2007.
§  0.9x Revenue:  Technology start-up valuation in 1Q09
§  1.4x Revenue:  Technology start-up valuation in 4Q09

Interesting Technology M&A Trends
Footprint extension (i.e., vertical integration; value-chain expansion) continues.
§  Software firms are encroaching in the hardware space (e.g., Oracle purchasing Sun)
§  Computational hardware firms are purchasing technology services assets (e.g., Dell purchasing EDS)
§  Services firms investing in software assets (e.g., Cognizant’s Master Data Management software product)
§  Networking firms investing in computational hardware (e.g., Cisco’s server blade)

Source(s):  NYT, 451 Group