Get Ready for More Tech Acquisitions This Year, Just Not Big Ones
Large tech companies with cash on their balance sheets may be getting ready to make some acquisitions in the coming 12 months, but don’t expect really big deals in the $4 billion or larger range.
That’s the assessment from Toni Sacconaghi, analyst with BernsteinResearch, in a note to clients today. IT hardware players like Dell, Cisco Systems and IBM have overall been a lot more acquisitive than general tech companies in recent years. Their healthy balance sheets plus an ongoing commitment by most of them to keep growing by way of acquisition could spur them to accelerate the deal-making pace.
On the software front, Sacconaghi found 82 companies worth $5 billion or less he said might be potential targets, and of those, 11 display conditions he said are favorable for being acquired within 12 months. Among them are Telecommunication Systems, Manhattan Associates, eGain, Limelight Networks and Zix.
A few other fast-growers that look ripe for a buyout, he said, include some players in the hot business intelligence and big data and security spaces. They include Datawatch, Qlik Technologies, Imperva, Sourcefire and Palo Alto Networks.
Who’s likely to be buying? IBM, EMC, Dell and maybe even Apple, he said. Hewlett-Packard, which has said it won’t be making any significant deals during 2013 until its balance sheet is whipped into shape, might get back in the game with some smaller deals in 2014 for companies with market caps of less than $1 billion. Its pace has slowed considerably since the $10 billion deal for Autonomy in 2011. Apple is likely to stick to its usual playbook of quietly buying small companies without meaningful revenue. “We would not be surprised to see Apple do some small deals to advance its iPhone/iPad/iPod capabilities and ecosystem, which would be consistent with the company’s acquisition track-record,” he wrote.
Another one to watch: Printing company Lexmark. It made its first deal for Perceptive Software in 2010 and has since closed eight deals. It has plans to have $500 million in software revenue by 2016 and is focusing on the content management market.
