Is Tech Ready to Go Deal-Crazy?http://www.fool.com/investing/value/2007/10/31/techs-ready-to-go-deal-crazy.aspx Tom Taulli
October 31, 2007
Over the past couple of months, tech companies such as SAP (NYSE: SAP ) , McAfee (NYSE: MFE ) , Microsoft (Nasdaq: MSFT ) , and Oracle (Nasdaq: ORCL ) have made some interesting headline M&A deals. Is this the start of a major trend? It may be. This is according to a tech research firm, The 451 Group.
First, let's get some background. The 451 Group reports that private equity (PE) tech deals surged 138% this year to $183.7 billion. Strategic deal making, on the other hand, plunged 31% to $212.4 billion. A strategic deal is when a company buys another firm in the same industry.
Here are the top five strategic and PE deals for 2007:
Private equity deals
However, if you take a look at the activity since August, there's been almost a complete switch. PE deals plunged from $42.3 billion to $5.1 billion while strategic deals increased 20% to $51.9 billion.
To get perspective, The 451 Group surveyed 62 respondents who represent companies that have spent $150 billion in M&A deals over the past five years.
Interestingly enough, more than 85% of the respondents said they expect to maintain or increase their M&A activity over the next 12 months. Of this group, about half plan to increase their spending and less than 10% see a decline.
Why the optimi