In preparation of our monthly M&A Update webinar with this months focus on IBM, I decided to look into the last 100 acquisitions made by IBM to see if there were any clear patterns behind their deal making psyche.
Looking at the data, it quickly became apparent that IBM buys software companies virtually exclusively in the US or Canada.
Of IBMs 64 software acquisitions made since November 2002, only 5 were outside of North America.
Zero in Asia. IBM did make four acquisitions in the region. They were in China, India and Singapore; however, not surprisingly, all were BPO or IT services companies.
Astonishingly, IBM has completely stayed out of Europe for the last two-and-a-half years. More strikingly, they rarely acquire European software assets. Their last European acquisition was in 2007. It was the $340m acquisition of iLog, a France-based vendor of Rules & Optimization and visualization software. It was one of only four European software companies IBM purchased while making a total of 69 software acquisitions over the past eight years !
What about other major software acquirers?
Oracle, another very prolific software buyer, has made ten of their last 60 software acquisitions outside North America. Seven in Europe.
At 12%, thats double IBMs ratio.
What about Microsoft? They are probably the most prolific software company acquirer on the planet. Looking at their last 60 transactions indicates a more global view regarding the sourcing of software IP assets worth acquiring. Thirteen were outside of North America, of which the vast majority (i.e. 12) were from Europe. Thats 20%! Or, in other words, more than *triple* IBMs rate.
And for the fun of it, I also looked at Googles record and queried their most recent 60 deals.
Similar to Microsoft, over one-fifth of Googles acquisitions were outside of North America. Just under 20% were European targets.
In summary, for roughly every four US or Canadian based companies purchased by these giants, one European software company will also be acquired.
In the end, it appears IBM has some catching up to do in terms of internationalizing the scope of their software purchases.
My conclusion: IBM needs to look on both sides of the ocean and not be so Euro-phobic ;-)