Tech M&A strikes back

Contact: Jarrett Streebin

As we pointed out in a recent webinar, 2010 is shaping up to be a great year for tech M&A. With year-to-date acquisition activity already surpassing last year’s total value and number of deals, it appears as though most companies were just sitting out the storm until it was time to start buying again.

The same trend in M&A can be seen in our annual AlwaysOn study. Each year before the AlwaysOn Summit at Stanford, we do a breakdown on companies that have been selected to the AO Global 250. This year’s uptick was even more pronounced for firms selected by AlwaysOn. The median revenue multiple for AO companies was 5.2, compared with only 1.5 for tech M&A as a whole. This was based on the incredibly high volume of AO companies bought. From August 2009 to early July, there were 37 exits by AO companies, more than in any other 12-month period before. There was also the second-most total spending, with more than $5.6bn spent.

Some of the more notable exits were AdMob by Google, Greenplum by EMC and Cast Iron Systems by IBM. Google, EMC and IBM were some of the most acquisitive players this year, with each buying three AO companies. They cast their votes in the most meaningful way – by reaching for their wallets.