Jaime Romero: Tracking Tech Sector Deals

Through the third quarter of 2011, the tech sector was the second most active sector on AxialMarket, representing 18% of all opportunities. In the space, 522 companies came to market, ranging in company size from $0 to over $528 million in revenue, within the United States and abroad.

Investors on the AxialMarket network express interest in an opportunity by “Pursuing” or “Declining” it. The pursuit rate is the percent of investors who have expressed interest in a deal – went after it – after being sent the opportunity from a seller, measuring engagement and interest.

● Computer Storage & Peripherals received the highest pursuit, yet accounted for less than 1% of the deal flow within the Technology sector, signaling a shortage of opportunities in the subsector.
● Although Advertising Technology represented 5% of the deal flow, it had a 5.8% chase rate, half that of the top category.
● Buyers showed a strong interest in healthcare tech with a 10.1% pursuit rate, signaling high demand for a subsector that made up only 3.8% of the total opportunities.
● Internet Software & Services was the only subsector ranked in the top quartile by opportunity to also have ranked in the top half by pursuits.
● Application Software was the most active tech subsector with 7.1% of the opportunities brought to market through Q3 2011.
● IT Consulting represented 6.7% of the tech opportunities, yet only received a 5.6% pursuit rate (see below), showing an oversupply of opportunities.
● Computer Hardware represented one of the least robust categories within tech, yet Investors have demonstrated a higher level of demand compared to other industries, with an 8.9% pursuit rate.
● Though Biotechnology has been hot in the news for a few years now, it made up a rather insignificant portion of tech deal flow, only 1.5% of the total.

Jaime Romero is a VP with AxialMarket; he blogs here . Download the entire Technology M&A / Deal Activity Report for additional analysis on geography, revenue, EBITDA, and investor demand. AxialMarket provides a network for private markets M&A; since January 2011, nearly 1,000 advisors have have researched and brought to market over 2,900 companies through the company.