The time is right for IT acquisitions

The recent flurry of major tech sector acquisitions is a sign of the benefits of counter-intuitive investment.

IT services firm Wipro's head of technology, Deepak Jain, has said that deals such as HP's buying of 3PAR and ArcSight, and Intel's purchase of McAfee, show that investing when you do not necessarily need to is perhaps the absolute best time to buy.

“We spoke to a large financial institution that deals with mergers and acquisitions, and its view was that you should always acquire when you don’t need to,” he said. “That’s the time when you’ll pay the right price. If you’re desperate and have to push the deal through today, you’ll pay more.”

He added that the time is right at the moment because many companies are finding themselves flush with cash, following the precautionary belt-tightening that was characteristic of the whole of 2009.

The UK technology sector has already surpassed the 2009 figures for takeovers, with £2.9 billion worth of deals already having been sealed, compared with 2009's meager £1.1 billion,, according to the Financial Times.

HP has spent more than £5bn growing its software business through acquisitions. HP's software and solutions VP, Ian May, said at the moment, there are a lot of acquisitions because people want the technology. He explained “Acquiring a firm for its technology is often much more cost effective than developing it in-house where the time to market would be too great and you may have missed the opportunity."