The global IT/ BPO industry witnessed over 33 M&A transactions in the month of March. The deal flow rose by 14% when compared to 29 deals recorded in the previous month. Total deals value growth was almost flat compared to the last month with a marginal an increase of 5.5%, moving from US$ 551mn in February to US$ 582mn in the current month. An increase in deal volume can be attributed to participation by countries such as Japan, China and India. The average deal size is US$ 17.6mn unlike US$ 20mn for 29 deals in the previous month. The action was dominated by small deals with 88% of the deals being less than USD 10 mn in size.

The largest deal of the month was initiated by the US based software service provider CA Inc. in a domestic transaction acquiring Nimsoft Inc. for US$ 350mn.  The target entity is a provider of Unified Monitoring solutions, server monitoring, network monitoring, database monitoring, application monitoring, end user response time monitoring, service level monitoring, and business service management. It also provides solutions to monitor virtual IT infrastructures including SaaS, hosted and cloud environments.

The solution is deployed in multiple commercial industry verticals where clientele includes Amway Corporation, Barclays Capital, Canadian Natural Resources, Community Health Systems, Erie Insurance Group, Foley & Lardner, Northrop Grumman Corporation, Rackspace Managed Hosting, State of Montana, Steria, TriNet, and U.S. Veterans Administration. The deal will further strengthen the infrastructure solutions offered by the acquirer along with providing a foothold in fast growing virtual environment.

The acquirers set primarily consisted of mid to large sized firms; where CA and GE were the largest. GE indulged in a small acquisition with the intent of strengthening its Centricity suite of products for electronic medical records. The target entity is US based MedPlexus with 100 employees spread across US and its development facility in Hyderabad, India. It provides solutions for individual physician’s office settings such as physician practice management, Electronic Health Record Solutions, ePrescription and patient self-service portal, which are offered as onsite solution as well as on a SaaS or ASP based models. The deal compliments GE’s Centricity products by adding on-demand SaaS capabilities and technology.

Acquires based out of US continued to initiate majority of acquisitions by cornering around 61% of total deal volume unlike UK that witnessed only 4 transactions. US saw 18 domestic deals and 4 outbound transactions. Other acquiring geographies were UK making 4 deals, India and China with 2 deals each and other includes Australia, Japan and Canada with single deals each.

In terms of target geography, US received 86% of total inorganic investments and 61% in terms of number of deals. Nearly four countries including Canada, Germany, India and UK attracted two transactions each. Other countries were Australia, France, Japan, Norway and Switzerland.

From domains perspective majority of deals were initiated in IT software space, where visibility for enterprise solutions, SaaS based solutions and other niche software products were high. There were few IT services acquisitions for SAP implementation and support and others.

Key observations-
1.Increased action in APAC (India, China and Japan)
2.Deals continue to rise in IT software space focused on virtualization domain such as SaaS and cloud computing
3.Smaller niche capability acquisitions were more and hence reduced average deal size.