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Summary:

In Silicon Valley, happy days are indeed here again: Investors are feeling generous, the IPO market is percolating, and the tech industry’s biggest players have worked up a very healthy appetite for mergers and acquisitions.

M&A Panel - Structure 2011

M&A Panel - Structure 2011In Silicon Valley, happy days are indeed here again: Investors are feeling generous, the IPO market is percolating, and the tech industry’s biggest players have worked up a very healthy appetite for mergers and acquisitions.

In a panel closing out day two of the GigaOM Structure 2011 conference in San Francisco, executives from some of the biggest names in the technology field talked about what kinds of companies are on their shopping lists — and what can make, or break, a tech M&A deal.

For its part, IBM is looking to spend a whopping $20 billion on acquisitions in the next five years, business development executive Lorenzo De La Vega said. And according to him, the company would be happy to spend much more if it could. “There are always more attractive ideas than there is money,” he said.

Business management software giant SAP looks to buy things that it can’t, or won’t, build internally.  “We don’t do tactical acquisitions, we only do strategic acquisitions,” interim CMO Jonathan Becher said. “We typically do acquisitions for market creation, to get into things we’re not [currently] in.”

CA Technologies’ senior VP of M&A Debra Danielson said her company is taking a similar tack.  “We’re focused on using M&A as a way to respond to changes that are occurring in the cloud space. It takes some time to develop a product organically and when the market and technology is changing as rapidly as it is now, you need to respond,” she said. “M&A [is] a really effective way of being agile in response to what’s changing at that level.”

VMWare was one of the younger firms represented on the panel, but the company’s corporate development VP Shekar Ayvar said he is definitely in the mood to snap up strategic buys of smaller firms. “Our foundational business is still growing faster than most people’s growth businesses,” he said. “But there is an acknowledgement that there are pockets of innovation outside of the company that it would be useful to us to keep watching and bring in [through acquisitions].”

John Dillon, currently CEO of the privately held platform-as-a-service company Engine Yard, reflected on his experiences on the sell-side of the negotiation table. “There’s a lot of emotion associated with what does this mean to me [as the CEO],” he said. “What happens after the company is absorbed?” It’s important for CEOs to hash out how they’d like their teams to be integrated post-acquisition, he said.

One thing is for sure: The cloud is one space that nearly all the industry’s biggest players are keen to buy into, IBM’s De La Vega said. “In this industry, sometimes it’s like kids playing soccer — everyone gathers around the ball,” he said. “Right now, cloud is one of the things we’re chasing.”

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  1. Elizabeth Miles Thursday, June 23, 2011

    Very exciting and interesting times I see. This is one way a company that deserves to go global can get there sooner

  2. From the last line: I think a better analogy would be “In this industry, it’s like playing hungry hungry hippos.”

  3. Rupert Hurley Sunday, June 26, 2011

    Really interesting article and useful to see how exits could potentially be achieved over the next 5 years. My company, digitalle limited, is positioning itself at some of the most exciting “nodes” within the online security space, and we welcome and investors or large firms getting in touch who would like find out more about our activities.

    Thanks, Rupert Hurley, CEO, digitalle lmited, UK based startup specializing in multi-channel publishing solutions, digital asset management and content / resource access solutions.

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