Tech Security An M&A Hot Spot For Industry Majors

Technology security companies stand poised to become an M&A hot spot in 2010. Profiting from renewed fears over tech-based security after search engine giant Google 's high-profile threat to pull out of China due to a cyber break-in, security software firms are rapidly becoming sought-after acquisition targets by tech industry majors. Tech security spending (which totalled US$26bn globally last year) is being driven by its position as a critical component of applications used by companies to store and manage networks and data. In addition, security companies typically have a recurring revenue business model that ensures strong cash flow - something a potential buyer could use to quickly refund any debt accrued to make the acquisition. The fact that security spending held-up well during the downturn even in face of overall shrinking IT budgets, serves as a mark of resilience that only adds to the lure of security companies. Buying a major security vendor would allow majors such as HP , International Business Machines Corporation and EMC Corporation , who are all looking at ways to bundle security software into the package it sells to consumers, to enhance revenue through sales. Unsurprisingly, the strongest performing firms including McAfee , Symantec and Checkpoint Systems , are likely being considered as potential acquisition targets. In particular, McAfee has made itself into more of an attractive acquisition target by recently signing 16 deals with federal agencies to begin pilot tests of technology to deflect attacks similar to the one highlighted by Google.

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