Tech M&A slumps to a start in 2011

Contact: Brenon Daly

January saw more tech deals than any single month of 2010, but M&A spending shows no sign of shaking off the slump it has been in for the past few months. The muted spending in the just-completed month marks the fifth straight month that the aggregate value for deals announced has come in only slightly above half of the monthly totals from last summer. And January is the lowest of the recent months.

We tallied some 308 deals in January, worth a total of just $11bn. That’s only slightly below the roughly $12bn monthly rate we’ve seen since last September, but it’s a far cry from the activity we recorded in the second quarter, where all Q2 months (April-June) topped $20bn in spending. (In terms of number of monthly transactions, deal volume ranged from basically 250-290 in 2010.)

In addition to the lower total value of deals, another troubling sign in January was the fact that spending was highly concentrated. The two largest transactions last month (Qualcomm’s purchase of Atheros Communications and Verizon’s acquisition of Terremark Worldwide) accounted for nearly half of all spending on deals announced in January. The 45% mark is higher than all but one of the previous four months, and notably above the 36% average for the September-December period.