Buyers’ strike

Contact: Brenon Daly

When the Nasdaq was on an uninterrupted slide from early February to early March, market pundits talked about a ‘buyers’ strike’ by investors. (The month-long decline, which erased some 20% from the index, sank the Nasdaq close to levels not seen since the tech industry was emerging from the wreck in 2002. It has since rebounded above month-ago levels.) Apparently, that buyers’ strike also carried over to the companies’ M&A plans during the first three months of the year.

Publicly traded tech companies inked just 119 deals, which is half the level as the same quarter in 2008. The decline in spending is even more pronounced: In the first quarter, US public companies announced a grand total of just $3.2bn, which is one-tenth the level ($39.4bn) during the same period last year. We would note that even typically busy tech buyers such as Symantec, Citrix, Google and Hewlett-Packard all sat out the first quarter. And many of the big tech shoppers that did announce transactions just picked up assets from startups. Among the buyers of wind-downs were Netezza, SAP, EMC and Quest Software.

Combine the reluctance of corporate buyers with the disappearance of financial acquirers, and it’s no wonder tech M&A plunged to a record low in the quarter. As we recently noted, spending on deals plunged 85% quarter over quarter to just $8bn. Look for our full report on first-quarter tech M&A in tonight’s sendout.