PwC Expects Strong 2010 US Tech M&A's

By February 16, 2010

PricewaterhouseCoopers predicts that 2010 U.S. technology sector deals will increase steadily, following the surge of activity in the second half of 2009. That said, PwC does not expect a return to 2006-2007 levels. Deals dropped 53 percent in 2009, valuing just under $36 billion – less than half of 2008’s $77 billion. Most of last year’s activity occurred in the second half: 64 percent of the year’s volume and 85 percent of its value occurred in the final six months' activity. Almost 50 percent of that activity happened in November and December.

"The first half of 2009 was a challenging one for the U.S. Technology industry, as uncertainty reigned supreme and companies struggled to forecast their next quarter's results. Yet, as markets began to regain some ground and CEO confidence grew, technology deal makers began to shift into high gear," said PwC's Todson Page.

Here are PwC’s analyses of specific sectors:

Software transaction values fell almost 80 percent in 2009, mainly the result of the middle market “drying up.” PwC predicts that the middle market will return in 2010, fueled by cloud and security applications.

Internet deal volume dropped 60 percent in 2009, as major players limited activity. PwC predicts that real-time search and location-based apps will spur these major players to “return to the hunt” in 2010.

Semiconductors have dropped 50 percent in each of the last two years. PwC expects buying to rise in 2010.

IT services were also down 50 percent in 2009. While opportunities remain scarce, PwC predicts that healthcare and government will drive middle-market opportunity.

While all other verticals failed in 2009, the only strong area was hardware/networking, which saw a 74 percent increase in value, though volume remained flat. PwC says that “unified computing will continue to drive land grabs by larger players which will also ripple into the middle market.”

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