Let's look back at the period immediately following the last big recession. Arrow and Avnet went on buying sprees to leapfrog each other, in order to momentarily claim the title of WBD - World's Biggest Disti. And chip makers did the same. TI bought 5 companies, National bought a few, Intel, Lattice, lots of others.
I expect a similar feeding frenzy in the coming 2 quarters, as many smaller chip makers have been weakened by the recession, having to lay off sales force, etc. They are ripe to be swallowed up. Not much more can be done in the Disti world as far as M&A, but of course as I say that, NuHo and Richardson have fallen in the last year...
It has already begun, with some interesting twists. Discrete maker Microsemi's purchase of White Electrionics and now Actel is a prime example. Interesting here: Synergies are not in culture, technology, geography, process, or Capex. Synergies here are in customer base.
The forecast seems certainly true since the M&A in the areas of Aerospace and Automotive certainly will e increased since the demand for the low cost automobiles and the low cost air services is always increasing because of the spending ability of the people in the developing nations. Regarding the medical domain there are lot of positive trends since this is one of the stable industry at the same time it takes lot of effort for any company to actually release a product into the market with all the regulations passed.
Good point, DennisQ. The tech acquisitions that have taken place in the second half of the year have almost exclusively been for cash. Just because the credit market is loosening up doesn't mean companies have to take advantage of that. On the other hand, having a reasonale level of debt used to make you less likely to be an acqusitiion target if you aren't interested in being acquired.
Acquisition is the most attractive strategy in business especially when economy is recovering from meltdown. Just acquire a potential startup or competive business and then kill the product thats in your direct competition.
Every business keeps its options open to M&A activity. As they say, "Its part of the business!"
If you want to look for M&A activity candidates, you need to look at those companies that plan to grow by acquisition and those that desperately need a partnership to survive the current market trends. Having observed the process fairly close a couple of times I can tell you that all real deals are done in complete silence! The government has demanded that any such speculation about M&A should not be discussed until the papers are signed. If word leaks out, you go to jail. If you have any doubts, look at the people who were recently pulled in for insider trading. Yes they will catch you.
So there is one sure thing you can bet on. If you hear rumors about an M&A, they are most likely untrue or from a source far from the action. Which should be ignored on its own merits. The only people who really know what is going on are barred from telling anyone.
If you want to try to predict M&A, start researching growth companies, look at what they do and who are their competitors. Then look at the companies that either compete with or complement those companies. From that analysis, you can probably establish a list of candidates, but that is as far as it goes. Everything else is pure speculation. Me, I don't gamble! I watch the idle talkers and those that pretend to know what is going on, but as I said, if they really know anything, they can't talk, so if they are talking, they don't know anything.
If you are confused by this post, then I have succeeded in showing you how convoluted the M&A process truely is and that you can spend a lot of time and effort only to be wrong.
Yes, a stronger credit market will be a factor, but especially in the tech sector I really do believe that some of these companies that have been accumulating huge cash reserves will finally open up their checkbooks and get aggressive. Apple I think is the most obvious example, but there are plenty of other of players as well. It's clear that Google is looking to make some moves as well, given their recent multi-billion dollar attempt to bring Groupon aboard.
I think we'll see some really unexpected, gigantic deals in tech in 2011. This seems like the perfect climate to make a bold, dramatic acquisition that could potentially reap colossal long-term benefits.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.