As I spend much of my time in the City of London, it is difficult to avoid the current doom-and-gloom. Although Finance is hurting, this seems to have had only a marginal impact on IT and software service M&A. Debt for the larger deals has dried up, but most companies are acquired for cash or shares, and whilst corporate profits hold up, M&A, especially mid-market M&A, continues. Indeed, with IPOs being closed off as a route to exit, M&A is currently the only game in town.
There are many factors that determine the right time to seek a trade sale, and one of the most common is consolidation. New sectors are initially exploited by early entrants, and consolidation of these players allows winners to emerge, driving deal flow and valuation multiples as companies seek not to lose out on opportunities. This cycle is part of normal business practice, and as yet I see no signs of it slackening. Indeed, one sector of current interest and no doubt soon to be of much activity is Financial Regulation every cloud has a silver lining.
Posted by John Melotte
, on 23 October 2008