Halfway through a rough year

Contact: Brenon Daly

Since we’re at the midpoint of 2009, we thought we’d tally what we’ve already seen in M&A this year and project what we’re likely to see for the remainder of the year. First, the look back at the first two quarters of 2009: The $58bn in announced and estimated deal spending so far this year is the lowest level of JanuaryJune tech shopping in a half-decade. More dramatically, spending on deals in the first two quarters of 2009 is only about one-quarter the amount spent during the comparable period in any of the past three years. June was a particularly slow month, after there were a flurry of deals in April and May.

As to what the rest of 2009 will look like, we suspect it will closely resemble the second half of last year. For the record, the announced spending from JulyDecember 2008 hit just $72bn. Obviously, it’s difficult to predict a lumpy business like M&A. But the way the economy is dragging along right now, we’re inclined to think that big buyers will look to take small bites for the rest of the year. That’s what they did in the second half of 2008. Indeed, it wasn’t that the traditionally busiest buyers in tech took themselves out of the market altogether. Rather, they just scaled back their purchases, despite holding tens of billions of dollars in cash. For instance, the largest transactions inked in the back half of last year by tech giants such as McAfee, Oracle, IBM, Google and Microsoft – among many other companies – were all less than a half-billion dollars.

Q1-Q2 tech spending

Year Deal volume Deal value
2009 1,400 $58bn
2008 1,557 $228bn
2007 2,005 $294bn
2006 2,019 $268bn
2005 1,388 $162bn
2004 999 $111bn

Source: The 451 M&A KnowledgeBase