Enterprise Application Mergers and Acquisitions Big and Getting Bigger

In the worldwide enterprise applications market, mergers and acquisitions have practically become everyday news. IDC, one of the research firms you can count on to count anything relating to the IT industry, recently tallied the number of deals that were done in 2005. The final score was 199 mergers and acquisitions, which is not quite one a day on average, but not too far off that pace either.

It was a notable jump from the 144 recorded in 2004, and what pushes this news toward the truly astounding category is that the value of these deals more than doubled to over $36 billion. As long as we’re stacking up large sums of money, consider that there were seven deals worth more than $1 billion in 2005, compared with only one in 2004. People used to say money talks, but lately it seems more accurate to say money shouts.

“By almost every measure, the pace and value of enterprise application mergers and acquisitions went through the roof in 2005,” said Albert Pang, research director of enterprise applications at IDC. “However, that doesn’t mean the market is likely to go the way of traditional industries, with only a handful of players left competing for the shrinking pie. Instead, the future is likely to be marked by continuous product and customer innovation from best-of-breed vendors as well as visionary players who know what it takes to stay financially viable as well as technologically advanced. These vendors will emerge as category champions and ultimately industry leaders for many years to come.”

Geographically, the number of enterprise application deals impacting the Europe, Asia/Pacific, and North America regions all shared in the increase. However, IDC reckons European and Asia/Pacific mergers and acquisitions will rise dramatically in 2006 as hungry investors and vendors replicate expansion strategies in new locations.

Horizontal enterprise markets accounted for the biggest percentages of deals in 2004 and 2005, followed by financial services and engineering. Vertical industry vendors that were highly sought after in 2005 include: retail, healthcare, banking, and manufacturing.