Contact: Brenon Daly
Where are the corporate buyers? That’s what we were wondering when tech M&A activity in October came in well below both the year-ago period and the monthly average so far this year. Consider this: October stands as the first month in 2010 that so-called strategic buyers didn’t announce a single transaction valued at $1bn or more.
Instead, the shopping in October was led by private equity (PE) shops, notably The Carlyle Group. The buyout firm announced the two biggest tech deals of the month, with back-to-back acquisitions of CommScope and Syniverse Technologies. Carlyle values those two purchases at $6.5bn – representing half the value of all tech M&A spending in October. (See our full report on October’s M&A totals.)
Carlyle’s big pair of deals in October follows a more representative September, when IBM and Hewlett-Packard held the top two spots for large deals. (IBM paid $1.8bn for Netezza on September 20, a week after HP said it will pay $1.65bn for ArcSight.) More broadly, tech companies have posted a number of 10-digit transactions since the summer, with Intel notching two of them, plus the typically acquisition-averse SAP doing the largest deal in its history in May.
It’s hard to figure out exactly what’s keeping companies out of the market these days. Third-quarter financial results, many of which were announced in October, have been solid for the most part. Similarly, guidance for the fourth quarter and into 2011 has been relatively upbeat. Reflecting that, the Nasdaq tacked on nearly 6% in October, helping the tech-heavy index approach the highs that it hit both back in April and in mid-2008. Further, the cash just keeps gushing into the treasuries at many tech companies.