Tech M&A Activity Falling Like a Rock

Jeffries just released a report on mergers and acquisitions activity in the tech sector for Q1 2009, and there are some green shoots signs that things may be bottoming out…maybe…hopefully…keep your fingers crossed.

While the number of tech deals in North America fell to a five-year low, it was only a 4% drop compared to the previous quarter. That neglible downtick is a lot easier to swallow than the 23% nose-dive that happened between Q3 2008 and Q4 2008. Q1 ’09 aggregate value for tech M&A in North America came in at $4.3 billion, again a 4% fall from the previous period (but an 85% kamikaze dive from Q1 2008). The first quarter of this year saw three tech deals valued at more than $500 million, which is down from 10 in first quarter of 2008.

Over here in “old” Europe, aggregate tech M&A value came in at $1.8 billion for Q1 2009, an 80%(!) decline from the previous quarter. However, despite that step off the techie deal cliff, it’s interesting to note that the proportion of sectors that saw deals has stayed rather constant with IT services deals hovering around 30% of total transactions for the past five quarters, and digital media M&A ranging from 32%-35% of total deals in that same period.

Based on these first quarter results, Jefferies is forecasting fewer than 1,500 deals this year in North America, a decline of 22% versus 2008, which saw 1,919 deals. In terms of aggregate value, the bank is expecting only $17.2 billion, a 79% drop from last year, and a far, sad cry from 2007, when the total deals announced were collectively worth (stop reading now if you have a weak heart) $191 billion.

And since we’re on the topic of Jeffries, here’s a recent presentation of their’s on TMT in Q1 2009. They’re seeing some signs of “cautious optimism” and have a nice section looking at IPOs and PIPEs:

And here’s a graph, albeit not one with the cleanest graphics, showing the tech M&A transaction trends:




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