Bargains for holiday shopping

Contact Brenon Daly

As we flip the calendar for the final month of 2008, we had to check that we weren’t in fact mistakenly looking at 2005’s calendar, at least in terms of M&A. That’s because deal flow this year is looking a lot like it did three years ago. So far, we’ve seen some 2,687 deals with an announced value of $286bn, compared to 2,761 deals worth $336bn during the same period of 2005. Compared to last year, spending is down some 37%.

As for what we might expect from financial and strategic shoppers in the final month of 2008, we think they’ll be mirroring retail shoppers. In other words, they’ll be looking for bargains. (We would point to the unprecedented ‘door-buster’ markdowns that sellers used to lure shoppers over the Black Friday weekend.) Already, we’ve seen the price tag of an average tech deal shrink to $106m this year. That’s down from an average of $134m in 2007 and $122m in 2005. Granted, this is a raw figure of all tech spending divided by the number of deals. But the direction of the aggregate number each year is telling.

Year-to-date tech M&A

Period Deal volume Deal value
January-November 2004 1,871 $151bn
January-November 2005 2,761 $336bn
January-November 2006 3,693 $428bn
January-November 2007 3,384 $455bn
January-November 2008 2,687 $286bn

Source: The 451 M&A KnowledgeBase