Decline in Crossborder M&A deals in IT and ITES

Cross-border deals seem to be feature of the India M&A landscape. The number of M&A'S are going on in various business functions and the future will witness a surmountable count. But what is interesting to know that there has occured a decline in the number of cross border M&A deals in IT and ITES. So here we will specifically deal with recent cross border M&A in Indian IT and ITES and will see how exactly decline has happened in the number of deals.

In the first quarter of current year, the IT and ITeS sector witnessed a sharp decline in cross-border merger and acquisition (M&A) deals involving Indian companies. The sector saw deals worth over $287 million in the quarter, against $596 million in the same quarter in 2007. During this period, the IT-ITeS sector witnessed 23 cross border deals, the same as the corresponding quarter of the previous year. These include IT services firm Mascon Global's $55 million acquisition of two U.S. based companies- Jass & Associates and SDG, Mastek's acquisition of enterprise solutions firm Systems Task Group International for $29 million and AurionPro's acquisition of Sena Systems.

Analysts say companies are delaying deal closures to figure out the impact on their businesses as well as in the hope for better valuations. Companies are not taking decisions for two reasons. One, they're hoping for valuations to get even better as valuations have take a beating globally. The other reason is that they are still evaluating how much their businesses are going to be affected by the crisis in the U.S.

Last year, the noted deals in the same quarter included Subex's $164.5 million acquisition of Canadian firm Syndesis, HOV Services' $148 million buyout of BPO Lason and Teledata Informatics' acquisition of eSys Technologies for $105 million. We defenitelly are witnessing slight decline in the number of M&A deals in IT and ITES.

Whatever be the reason but I feel that greater clarity is expected to emerge about the impact of the slowdown in the U.S. on the Indian IT-ITeS sector. Cross-border M&A is becoming a more prevalent feature of the Indian corporate landscape. We expect this trend to continue as the world becomes smaller and as the growth opportunities for local players continue to be limited by the size of the Indian market