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The following share-price jumps underscore just how much money there is to make in the merger and acquisition (M&A) market – if you know how to choose the right buyout targets, that is.
For example, shares of Pace Plc. (OTCMKTS: PCMXF) soared more than 33% on April 24.
The reason: The maker of set-top boxes and broadband networking gear agreed to be acquired by industry leader Arris Group Inc. (Nasdaq: ARRS) in a deal worth $2.1 billion.
And on March 30, insurer UnitedHealth Group Inc. (NYSE: UNH) said it was buying Catamaran Corp. (Nasdaq: CTRX), sending shares of the Illinois-based pharmaceutical benefits manager up nearly 25% in one day.
I expect to see a lot more M&As through the end of the year. Indeed, a recent report shows that first-quarter global M&A activity reached its highest level since 2007.
With that in mind, today I want to introduce you to three companies that I believe are good Tech Takeover Targets. And I want to show you how to invest in them before they get picked up and their share prices soar.
After all, there's no money in the M&A market if you wait too long to make your move…
Perfecting the M&A Market
When it comes to M&As, 2015 is off to a roaring start. Thomson Reuters recently reported the total value of global M&A hit $811.8 billion.
No, that's not an annual figure – that's just the value of all deals announced in the first three months of this year.
Thomson Reuters says U.S. firms account for the largest share of the global M&A market. All told, American companies announced $399.1 billion in M&As in 2015's first quarter, or 49% of the world's activity.
That's in no small measure because of the health of the tech industry. Overall, tech firms are reporting strong growth in sales, cash flow, and profit margins.
In fact, the strong first quarter follows what the analysts at PwC say was a "banner year" for the U.S. technology M&A market. According to PwC, the volume of U.S. tech deals increased 36%, and the volume of deals jumped 62% – to 235 M&As worth $145.5 billion.
While you can spend hours combing debt-to-equity, liquidity, and market cap numbers, finding good Tech Takeover Targets remains more art than science.
However, as someone who's spent well over 35 years in and around Silicon Valley, I've gotten pretty good at that art. It all comes down to catalysts – acquirers are looking for good fits and solid reasons to act now.
And after running those numbers and then taking a good, hard look beyond them, I think I've identified some pretty good catalysts – and, therefore, some companies that I believe will get bought out within the next year or two.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.