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Tech Companies Stay Close to Home for Acquisitions

June 15, 2009
by Ben Worthen
Reporter, The Wall Street Journal

Ben Worthen

Tech companies buy their neighbors much more often than they acquire companies elsewhere, according to a study of tech acquisitions since 2002.

The conclusion isn’t shocking. There are a number of reasons why a buyer would be more familiar with companies based nearby. They’re more likely to share investors, have employees who worked for both companies, or maybe the CEOs belong to the same golf club. But given the ongoing battle between East-Coast giant EMC (EMC) and Silicon Valley’s NetApp (NTAP) to take over another Valley company, Data Domain (DDUP), it’s instructive to see just how prevalent the preference is.

Since the beginning of 2002, publicly-traded tech companies based in California have bought 1,994 private companies, 36 percent of which have been based in the state, according to 451 Group, an analyst firm that tracks M&A activity. That’s about three times the rate that publicly-traded companies based on the East Coast bought California companies.

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