I was excited to be in the Midwest this past week, speaking at Corums Merge Briefing and meeting with software companies. The Merge Briefing was sponsored by NEOSA (www.neosa.org). the COSE Technology Network located in northeast Ohio. I talked with about 20 execs of software and IT companies who are guiding their companies growth in uncertain times. Their challenges include rapidly evolving technology, increasingly competitive pressure, uncertain economic direction, and continuing consolidation in all their markets. The Merge Briefing shed light on what qualities active buyers are looking for in their acquisitions, what execs can do today to create value tomorrow, and valuable tips that software company owners can use to prepare for a future liquidity event.
Theres something happening in the market, and its good. I was talking to one of my colleagues last week, who is now in the UK speaking to companies in England, Scotland and Ireland. Although its difficult to pin down exactly what has changed, hes seeing more activity and multiple suitors are pursuing his clients. Transactions that were moving slowly last quarter are advancing briskly.
In a similar vein, over the weekend a principal at one the largest tech-focused private equity firms was telling me about positive signs hes seeing in 2010, and theyre actively ramping up efforts to build deal flow. Hes seeing higher quality assets come to market [aka software companies considering M&A] whereas they were on the sidelines last year. And although this PE firm doesnt aggressively lever their transactions, he reports that good debt is again available if they need it to make the deal pencil out.
All in all, 2010 looks like a great time to start an M&A process.