Trends Report

M&A Activity In The Current Downturn Reshapes The Software And Services Markets

A Review Of M&A In The Software And Services Markets, H1 2009

October 13th, 2009
With contributors:
Pascal Matzke , Charles Green

Summary

Although mergers and acquisitions (M&A) activity in the tech industry in absolute numbers declined in H1 2009, the deals coming through in the current period are likely to fundamentally transform the overall market landscape. Principally, M&A deals conducted during or shortly after a recession always have the potential to provide companies with above-average returns. But our analysis reveals that in addition to such traditional benefits, deals happening during the current recession have the potential to change the market by accelerating certain technological trends, such as cloud computing or software-as-a-service (SaaS). Meanwhile, most of the acquisition targets represent smaller or medium-size companies, which indicates that buyers are keen on limiting potential integration risks. Yet these smaller firms can still provide crucial capabilities for companies looking to transform themselves in preparation for the economic upturn.

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