Contact: Brenon Daly
We finished counting all of the nickels and dimes from last year’s M&A spending and, as expected, we’re looking at a rather paltry total. Overall, acquirers across the globe announced tech deals worth $302bn in 2008, down 30% from the total in 2007. (We explore the reasons for the decline – and what it will mean for dealmaking this year – more fully in our 2009 M&A Outlook.)
Perhaps the most interesting point about M&A last year, which goes a long way toward explaining the one-third decline, is the fact that we saw a sharp contrast in the dealmaking activity of strategic and financial acquirers. For the most part, corporate shoppers continued to buy, with the number of dollars spent dropping ‘just’ 12% from the previous year.
On the other hand, PE shops slashed their dealmaking by 77%, spending roughly the same amount on tech LBOs last year that they did in 2004. And given the state of the current credit market – along with some of the painfully ill-advised bets they made on portfolio companies when the markets were smiling – we can’t imagine that situation will unwind enough to spur much activity in tech LBOs in 2009. Indeed, nearly nine out of 10 corporate development officers we surveyed in mid-December said they expected even less ‘competition’ in deals from PE firms this year.
Annual deal flow
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Source: The 451 M&A KnowledgeBase