M&A in the first quarter of 2010 was a bit deceiving. Anecdotally, we have seen a gradual improvement in the tone of the market over the past several quarters, and Q1 was a continuation of that trend. However, when measured empirically, overall M&A transaction volume within the internet, mobile and digital media sectors declined, particularly in what we consider the “sweet spot” of activity, transactions between $25 million and $1 billion in size, which we summarize below.
A few items to keep in mind when interpreting the statistics below. First, Q1 activity levels are typically lower than Q4 of the previous year due to the natural end-of-year sense of urgency. Second, Q1 2010 lacked headline deals such as Google’s proposed purchase of AdMob, Adobe’s acquisition of Omniture, Silverlake’s acquisition of Skype and several large Cisco acquisitions, all of which were announced in Q4 2010. Finally, quarterly numbers generally tend to show volatility.
Based on our own activity levels and conversations within the industry, looking forward we expect that empirical data will begin to look more like the current tone, optimistic but prudent.
