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Don't worry, Tech Deals are Coming Back, 2010 Q1 up 55%

WSJ June 3, 2010

By Anupreeta Das

Bankers tend to be eternally hopeful. Chet Bozdog, the global head of technology investment banking at Bank of America Merrill Lynch, is among those optimists.

Bozdog expects deal-making to soon pick up in the U.S. tech sector, which has seen $33 billion worth of deals this year, according to Thomson Reuters data.

Despite the current M&A drought, it’s been a good five months for Bank of America Merrill Lynch’s tech team, which is ranked third in the tech league tables after Barclays Capital and Goldman Sachs, according to Thomson Reuters.

The low-profile group headed by Bozdog has been involved in both of the high-profile tech deals this year. They advised Hewlett-Packard on its $1.2 billion purchase of smart phone maker Palm, and sold database software company Sybase to Germany’s SAP for $5.8 billion.

Deal Journal caught up with Bozdog, a former mechanical engineer for GE, on what tech deal-making is going to look like in the coming months:

Deal Journal: What are some of the trends driving consolidation in the technology sector?

Bozdog: There are a few key trends. First, mobility is a key focus. More and more data will be consumed by mobile users, so it’s one of the largest areas of growth for technology. The second key driver is security. It’s becoming far, far more important across the board. As corporations look at outsourcing their data to the cloud, their biggest concern is the security of that data. Third, the data center. Data centers are a good area of growth and a key area of overall consolidation as tech companies look to make them more efficient and provide a more comprehensive set of products. HP-3Com and BMC Software-Blade Logic are a few transactions that took place specifically to gain technologies and products for the data center.  The overriding theme of all these trends is growth. Tech companies are looking for areas that will drive growth for their business

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Ernst & Young

Global technology M&A update: 1Q10 highlights

Despite the reduction in large-dollar deals, the number of deals in 1Q10 grew to 628 (up 55% YOY and 14% sequentially) showing certain dynamics continue unabated — the blurring of sector, industry and work-life boundaries; the migration of other industries to “smart” products and services; and the mobilization of information and media.

More specifically, we saw deal growth being driven by development of a mobile “ecosystem” and by cloud computing (including SaaS), health care IT, clean energy and smart-grid initiatives — as well as by recession-weakened companies in need of partners to preserve their businesses and visions.

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