Ryan Blakely, director of research at Corum Group, looks at how M&A activity remains resilient within the tech sector "Looking globally is a vital component in a successful exit, especially in today's turbulent economy"
This year will prove to be one of the most challenging years ever. Amid the systemic problems in the financial community, declining demand for business services and a non-existent consumer, just making it through the year will be difficult, not impossible, for many.
That said, software and IT remains active as companies of all sizes and disciplines embrace it not only as a corporate strategy, but as a vital component of future technology, revenue and geographic growth.
The Corum Group is the global leader in merger and acquisition services specialising in serving software and IT companies worldwide, with over 60 per cent of annual deal volume being cross-border. Looking globally is a vital component in a successful exit, especially in today's turbulent economy.
Some examples of Corum's expertise in cross-border transactions include:
• Ness Technologies' (Israel) acquisition of LOGOS, an IT services and consulting firm specialising in the financial and telecoms sectors based in the Czech Republic. Ness has long been a buyer of targets outside Israel, and through this transaction, along with others, continues to build its presence in Eastern Europe.
• Polaris Software Lab (India) acquired US-based SEEC, Inc. in an all-cash deal. The transaction expands its global presence, while executing the firm's growth strategy in the insurance space.
From a macro perspective, uncertainty surrounds the prospects for 2009. However, what is certain is that valuations will remain volatile, revenues and profits will be difficult to sustain, and pervasive technologies and international firms will be attractive targets.
During these difficult times, some companies will fail, while the only possible exit opportunity will be via M&A
A version of this article originally appeared in the Mergers and Acquisitions Magazine (Jan./Feb. 2009 issue)