Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO)
On its face, it looks like the tech M&A market is holding up nicely — despite the credit crunch and slowing economy. For example, in Q1, tech M&A came to $92 billion, which was down from last year’s $100 billion (this is according to the 451 Group).
Good, huh? Well, as usual, statistics can be deceiving. Keep in mind that Microsoft’s (NASDAQ: MSFT) $45 billion bid for Yahoo! (NASDAQ: YHOO) was a huge factor (interestingly enough, there are signs that the deal may not go through).
In fact, there was a 50% reduction in deals in excess of $1 billion (only 11). For the most part, larger transactions need debt financing — which is in short supply nowadays. After all, last year we saw a rush by private equity firms into the tech sector.
According to the 451 Group, it also looks like strategic buyers are getting skittish. Simply put, they are concerned about the macroeconomy. And something else: with lower stock prices — with companies like Microsoft, Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) and VMware (NYSE: VMW) — it is more dilutive to do deals.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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