Processing .....please wait.. 
The article has been forwarded.... 
Small and medium IT segment to resort to M&A
By siliconindia
|
Saturday, 06 September 2008, 17:38 IST
Bangalore: Small and medium IT and enabled services companies due to the stock market alteration have experienced a fall in the valuations. Investment bankers expect consolidation within small and medium business (SMB) sector through mergers and acquisitions (M&As). The move is also triggered by a need to build up a decisive mass and healthy balance sheet in the SMB space to garner sizeable deals from large clients.
In May this year, MindTree, an IT and R&D services company bought a majority stake of 32.57 percent. Experts perceive this deal as an indication of more such deals in this space.
Raj Chatterjee, Director, investment banking, Motilal Oswal said, "The SMBs in India are now opening up to be acquired and especially by another SMB, as a defence measure."
The market capitalisation for SMB IT and enabled services companies fell by 34.24 percent from Rs 51,627.57 crore in January this year to Rs 33,949.92 crore in August.
Industry sources point out that it is increasingly becoming tricky for the SMBs to sustain, as healthy balance sheets are becoming an important requirement to get contracts from large clients.
