Tech Deal-Making Grinds to a Near-Halt

Posted by: Spencer Ante on March 10, 2009

I just got a hold of an illuminating (and depressing) report on tech deal-making through the first two months of 2009 from the Boston investment bank America’s Growth Capital. In short, deal-flow has ground to a near-halt, slowing down even from last year’s languid pace.

Among the low-lights:

* Wall Street transaction activity, including global technology, is down 50% year-over-year, down 60% compared to 2007, and down even more on a dollar-value basis. So far this year, only 6 out of roughly 400 M&A global technology transactions have had values of $100 million or greater.

* On the technology financing front, there have been no follow-on offerings or IPOs, and there have been only 11 private investments in public equities (PIPEs) and 91 Private Placements of $5 million or greater YTD, as compared to 37 PIPEs and 190 Private Placements in the same time period last year.

* America’s Growth Capital expects technology transactions for 2009 and the foreseeable future to be dominated by $2-$30 million private placements, some PIPEs, very few public offerings, and 90% of M&A transactions valued between $1-100 million.

* The top 11 technology giants, such as IBM, Microsoft and Cisco, have only announced 8 deals YTD (compared to 16 at the same time last year).

* The top 15 Financial Buyers of technology, such as Warburg Pincus and the Carlyle Group, have yet to do a deal!

* Strategic and Financial Buyers have the cash for acquisitions and are attracted to the depressed valuations (public valuations have dropped over 50%), yet have been reluctant to deploy capital as these valuations have continued to fall.

* Sellers are also reluctant to strike a deal given battered valuations and are generally opposed to relinquishing control (and their current income) during these turbulent times.

- Spencer Ante also publishes the Creative Capital blog. Click here to see more.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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