Vertical Market - 2007 Q4

The following excerpt is from Corum’s Quarterly Research Report of 2007 Q4. Corum is pleased to make the entire report and earlier ones available to members. Sign up today! 

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2007 Q4 — Vertical Market Technology

Vertical Market Technology remains the most active sector in regards to IT M&A transactions during 2007. This is partially due to the large number of vertical market subsectors, but also due to the high demand for niche, focused technologies, domain expertise and customer base. We have highlighted dozens of deals in this report. Some of the more notable transactions include:

1. Microsoft acquires Global Healthcare. Although Microsoft has been one of the most active acquirers we track, this was notable in that Redmond is increasing their vertical focus, whereas in the past any vertical applications came primarily from third party vendors that provided tailored solutions to augment their more generalized solutions such as Great Plains. This is a trend we have seen increasingly in the past years as other larger ERP solutions providers such as SAP and Oracle have also acquired increasingly vertical solutions.
2. Purepay acquires Netvantage and CybrCollect. Purepay is an interesting company that was only recently funded to do a rollup in the electronic payments and related financial services software. Backed with both private equity and banking industry partners, Purepay has made several other acquisitions recently, including remittance processing vendor Creditron (Toronto). One suspects the objective is to create an industry leader that will eventually go public or attract the likes of a large acquirer like Fiserv. More to follow as we track Purepay.
3. In the telecom field, Nokia announced the acquisition of Navteq, a leading provider of navigation software. This is a very fast growing segment of the technology business, as vendors seek to enhance their offerings of location-based services, so expect the handset maker to rollout unique new services to its customers.

Although each deal is different, there are some interesting trends worth examining while we try to get our arms around the motives of buyers and sellers, and how M&A can help both achieve their goals. As advisors to hundreds of software executives, and representing many vertical market sellers, we see the following factors…

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