CFO.Com Reports Increase In Tech Deals

Deal activity in the technology sector surged in the closing weeks of 2009, reversing two years of deepening drought. The flurry followed a long period during which share prices collapsed and the next quarter's revenues were often hard to forecast.

For the full year, the number of deals fell to 107 from 195 in 2008, while closed-deal values dropped 53% to about $36 billion, according to a new report by PricewaterhouseCoopers. However, almost half of that dollar value was attributable to transactions that closed in the year's final two months.


The momentum is continuing into 2010, says Todson Page, a partner in PwC's technology transaction services practice. Given the stock markets' recovery and the increased demand some technology vendors are seeing, the pace is expected to accelerate. Still, activity may be restrained by a continuing gap between companies' true underlying value and what potential buyers are willing to pay for them, says Page.

Driving the miniboom will be the return of middle-market deals, which PwC defines as between $50 million and $500 million. As in other industries, many midsize firms stayed on the sidelines in 2009, looking for credit and waiting for the economy to stabilize. But PwC forecasts that this year the middle market will regain its historical level of accounting for 90% of technology deals. "We're expecting not only that midmarket companies will be targets of larger companies but also that they will be buying each other as they try to position themselves for some type of 'new normal' in the technology industry," says Page.

For rest of article
http://cfo.com/article.cfm/14476591/c_14477444