Updata Advisors and Morrison & Foerster have just published a survey, conducted during Q3, of senior executives in the software, internet and related services industry about their M&A interests. The survey covered executives in the US, Asia and Europe.
This is a topic that keenly interests me as, over the past few years our industry (internet and software), has experienced an uneven exit environment; with windows opening and closing at an ephemeral pace. I have found that keeping current on the M$A environment is a critical element towards appreciating the window of opportunity to reap rewards for many years of hard work.
1. Buyers expect to remain active (45% expect M&A to increase or remain the same), as the economy gives many players the ability to grow global market share at more reasonable prices.
2. Large-cap buyers are expected to lead the way. Unfortunately, if true, this will probably continue the trend of reducing the number of public companies in the industry and, unless refreshed, result in a smaller universe of buyers.
3. In the Internet sector; security, e-commerce infrastructure and content providers are the most interesting to buyers. Interestingly, social and shopping sites were laggards. If the intentions of the survey bear out, it seems there's a mis-match between many of the internet investments over the past 3 years, and buyers intentions.
4. Nearly 70% of transactions are sourced from internal sources...not introduced by bankers. Again highlighting that effective Business Development/partnerships is the most reliable way to a positive exit.