Web-oriented merger activity is likely to slow, professor says

Now that the markets have resumed more rational pricing of technology companies, merger and acquisition activity in the IT sector will not reach the same fervor at any point in the near future that it did over the last four to five years, says University of Alabama at Birmingham finance professor Lance Nail.

"The key reason for this is that the source of currency used in these transactions, the stock of the acquiring company, has been severely devalued in the recent NASDAQ meltdown," he says. Potential acquirers now have to offer a greater percentage of their own firms in these stock exchanges. Some mergers will still happen if the combined firm can capitalize on economies of scale/scope or resources. However, these will occur at a much slower rate in the near future, he says.

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