While economic drivers of selected M&A activities we observed in 2007 have changed, we expect overall deal volume to remain robust in 2008
New York, NY (Vocus) February 7, 2008
Updata Advisors, Inc., a leading investment banking firm specializing in IT industry mergers and acquisitions since 1987, today released its annual outlook on merger and acquisition activity for the year ahead. The 2008 Information Technology M&A Outlook, also reviews M&A transaction and trading data in 2007 across five key technology sectors: enterprise application software, internet, infrastructure software, IT security/compliance, and IT services.
The report predicts a strong 2008 for tech M&A. Deal activity drivers include:
- Value-driven Strategic Buyers: Choppy equity markets and reduced private equity buyer activity will result in less competitive and better-priced M&A auctions in certain areas, driving opportunistic strategic buyers to the table.
- Disruptive Technologies Stimulate New Markets, Creating Solution Gaps: Web-enabled (Web 2.0) services, applications and devices are driving a new spending cycle among consumers and businesses seeking greater productivity and convenience. This will open new areas of M&A activity.
- M&A to Compensate for Slowing Economic Growth: With a lighter tailwind from the overall economy, many IT vendors are stepping up M&A activity to maintain overall business growth rates demanded by their public shareholders.
- Consolidation Among Large Cap IT Companies Vying for Global Leadership: Microsoft-Google's tit-for-tat deals highlight the competitive environment among the largest IT players. As the largest vendors jockey for top-spot status in their markets, the impact on M&A activity may continue to be substantial, largely irrespective of outside market conditions.
- Overseas Acquisitions of U.S. Firms Fueled by Dollar Devaluation: More non-U.S. companies will acquire U.S. firms in 2008, due in part to the devaluation of the U.S. dollar relative to foreign currencies.
- IPO Option Remains Elusive: If only the very strongest companies have access to the shrunken IPO window, the vast majority of VC and PE-backed companies will focus more heavily on the M&A exit path.
"While economic drivers of selected M&A activities we observed in 2007 have changed, we expect overall deal volume to remain robust in 2008," said Ira Cohen, Managing Partner for Updata Advisors. "We see strong evidence of this market among our own active client engagements and anticipated near-term transactions."
Updata Advisors advised on 16 transactions that were announced or closed in 2007 across its sectors of focus:
Updata Application Software Transactions
- RMI*, independent provider of rail information services, was acquired by The Carlyle Group.
- ThirdForce PLC*, a global e-learning provider acquired Mindleaders Inc.*, a leading US e-learning company.
- INVESTools Inc.* (NASDAQ:IEDU), provider of online investor education solutions, merged with thinkorswim Group Inc., a leading online brokerage platform.
Updata Infrastructure Software Transactions
- Versata Enterprises* will acquire NUVO Network Management Inc. (TSX Venture Exchange: NVO), a leading provider of remote infrastructure management solutions.
- CollabNet, Inc. the leading provider of collaborative software development solutions, purchased VA Software Corporation's* (Nasdaq: LNUX) SourceForge Enterprise Edition.
- Compuware acquired Proxima Technology*, provider of business service management solutions.
Updata IT Security Transactions
- Exploit Prevention Labs*, provider of safe internet surfing technology, was acquired by Grisoft, developer of AVG security software products.
- Barracuda Networks, Inc., provider of email and Web security appliances, acquired NetContinuum*, provider of web application firewalls.
- Security SaaS provider, Perimeter eSecurity* merged with e-messaging provider, USA.NET.
- Intego*, developer of internet security software for Macintosh, received strategic investment from Bessemer Venture Partners.
- Web security and filtering software company, Websense acquired SurfControl*, a global provider of on-demand security services.
- Consul*, a provider of compliance and security audit software, was acquired by IBM.
Updata IT Services Transactions
- HP (NYSE:HPQ) will acquire EYP Mission Critical Facilities Inc.* (EYP MCF), a strategic technology planning and consulting firm for large-scale data centers.
- CIBER* acquired the SAP Practice of Headstrong Corporation, operated under the name of Metamor Enterprise Solutions LLC.
- H.I.G. Capital completed a strategic investment in Insight Global*, a leading provider of IT staffing for Fortune 1000 companies.
- Capgemini Group's U.S. business, Sogeti USA* acquired IT consulting company, Software Architects.
*Indicates Updata client
About Updata Advisors
Based in New York, New York and Reston, Virginia, Updata Advisors, Inc. is a leading investment banking firm specializing in mergers and acquisitions for the IT industry. Since 1987, the firm has advised on nearly 400 transactions for e-commerce, infrastructure, financial technology, telecommunications, e-services, software, IT services and security software firms. Updata Advisors is perennially ranked among the top five advisors in transaction volume to middle market companies in the computer software, supplies & services industry, according to Factset Mergerstat. For more information, please visit http://www.updataadvisors.com.
rdvorak @ updata.com