Talks of a ‘fiscal cliff’ and potential changes in capital gains taxes spurred company executives and their bankers into action in the final hours of 2012. In a way, that anxiety spilled over into the beginning of this year when we saw a flurry of acquisition announcements in the first few weeks of January.

However, many of the announcements in early January were deals that closed in December. Throughout the month, we saw a continuation of the downward trend in deal volume. On the heels of a 6% decline in total deal volume for full-year 2012, the total number of transactions announced in January 2013 dropped 15% from the year-ago period. It was the fewest number of announcements in the first month of a year since the recession year of 2009.

Contributing to the slowdown in M&A activity is the fact that, according to the US Department of Commerce, the US GDP shrank 0.1% in the fourth quarter (though that number is subject to revision). Although many consider the dip a one-time slump due to declining government spending, much of the tech industry is struggling to find any growth.

In a survey conducted at the end of 2012 by ChangeWave Research, a service of 451 Research, 26% of respondents expected their IT spending to decline in the first quarter of 2013 – a full 10 percentage points higher than the level of respondents who projected increased IT spending in the quarter.

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