(By Richard Holway 6.00pm Monday 5th Oct 09) I do get a growing sense that M&A is on a real upwards trajectory right now.At the 'top end' we have seen a resurgence in large scale deals in the IT services space - Dell/Perot, Xerox/ACS are recent examples. Software players have been on a consolidation spree for years. Now they are branching out into adjacent areas eg Oracle and Sun. Today, the WSJ reported that Brocade Communications, which sells routers and switches and software to help corporations manage data networks, had 'put itself up for sale'. Brocade has estimated revenues of c$2b in the current year and a market value of c$3.2b - I suspect somewhat higher when a bid premium is included. The WSJ reckons Oracle and HP are the lead candidates.
At the other end of the scale, I quote from George O'Connor (Panmure Gordon) morning note today whilst quoting from the Mercury Evening News "People are calling me and saying, 'We've got a month's worth of capital left. Will you buy me?' ". Company failures actually increase when the bottom of a recession is reached and we start to climb out. Many observers believe we are in for worse - indeed the dreaded 'W' - before the recovery really gets underway. I've just listened to Steve Ballmer (CEO at Microsoft) on the BBC suggesting that he doesn't see any improvement in the business environment for at least a year. Sombre stuff. In other words, expect 'distressed sales' to increase significantly in the period to come.
Conversely, the M&A brokers might be in for a welcome uplift in their business. It's been pretty dire for many in the last year.
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