Frightfully light M&A totals in October

Contact: Brenon Daly

The economic recession may be (officially) over, but the recession in tech M&A lingers on. If anything, it’s getting deeper, with the fourth quarter starting at a particularly sluggish pace. In the just-completed month of October, we tallied only 243 deals worth a collective $11.7bn. Not only is that substantially below the same month last year, but it also significantly lags the average monthly M&A activity that we’ve recorded so far this year. The reason? Corporate buyers largely sat out the month.

Year over year, the number of deals in October 2010 declined 15%, while spending dropped 22%. Similarly, when compared to earlier months in 2010, October is going down as one of the weakest months for acquisitions. Through the first three quarters of the year, the average number of monthly transactions stood at 268, or about 9% higher than the 243 deals in October. (Indeed, only one month in 2010, August, has recorded fewer deals than October.) The drop-off in M&A spending in October is even more pronounced. The total value of transactions hit just $11.7bn, which is 25% lower than the average monthly spending of $15.7bn in the nine months leading up to October.

Obviously, we don’t want to read too much significance into a single month worth of numbers, particularly in a business as inherently lumpy as M&A. Nonetheless, we might suggest that M&A has joined a number of other markets that have largely been bypassed by the recovery. Clearly, the impact of tech acquisitions not getting done is nowhere near as significant, for instance, as the dreadful employment picture (one out of 10 Americans out of work) or the seemingly intractable housing mess (banks will likely foreclose on more than one million homes this year). But the continuing tech M&A slump is still worth noting as yet another sign of how far we are from where we once were