To no surprise, successfully timing markets is extremely difficult, especially when attempting to tie market indicators to the direction of Tech M&A. Over the last few months, public markets have been performing poorly. Nevertheless, Corum has had an exceptional quarter selling privately-held software companies.
The new flock of high flying public companies who IPOd over the last year has been encouraging and driving growth in M&A activity. Facebook, Zynga and Groupon have doubled their acquisitions in Q1 2012 as compared to Q1 2011. Facebook alone has purchased 12 companies in the first three months of 2012, already even with its 2011 year-end total. In other words, there are tremendous exit opportunities despite the dismal individual performance of these big buyers over the last few weeks.
What are these three eager spenders looking for next?
- Zynga: Always focused on producing hits and keeping users/gamers entertained, Zynga's likely targets include exciting game developers who show scale and promise.
- Facebook: Previously focused on acqui-hires, Facebook is now turning to solutions for the mobile front as well as new technologies for expanding user consumption.
- Groupon: The company will search for complements to their daily deal focus, where a solution can be directly used by their merchant base or their customer base.
We also anticipate a pickup in deal activity in the enterprise-focused, IT management space following the ServiceNow IPO in the next few weeks.