451 CAOS Theory *
A blog for the enterprise open source community

M&A activity is the new VC funding

, October 3, 2007 @ 10:38 am ET

I mentioned yesterday that the big money for established open source vendors went on M&A activity rather than venture funding in the third quarter.This is an indication of the maturity of the open source software market as open source vendors are beginning to reach a level where they either appear to be attractive acquisition targets or are making purchases to expand their offerings and strengthen their positions.

I thought it was worth trying to build a table of open source M&A deals, but having started to do so quickly realized that there has been a lot more activity going on in this space than is immediately apparent.

For every major deal such as Yahoo!’s purchase of Zimbra, there are a handful of smaller deals – such as Red Hat’s acquisitions of Mobicents and the MetaMatrix business. Assembling a table of deals that is anywhere near definitive will take some time, therefore.

What is immediately apparent from a scan of the 451 CAOS Theory archives, however, is that there has been a rapid increase in M&A activity in recent quarters. In the third quarter alone there were 13 deals where the acquirer or acquired (or both) are open source software vendors. In the second quarter there were six. In the first quarter just three.

The Q3 deals (details of which can be found via a search of this blog) more or less fall in to two categories:

Open source acquisition targets
Citrix acquires XenSource
Yahoo! acquires Zimbra
Sun acquires Cluster File Systems
Bluesocket acquires Pingtel

Open source consolidation
Xandros acquires Scalix
Digium acquires Sokol & Associates
Sourcefire acquires ClamAV
Wind River acquires Comsys
Ingres acquires Luminary Solutions
Ingres acquires Management Information Systems
Digium acquires Switchvox
Univa merges with United Devices
ActiveGrid acquires TurboAJAX

Of course the deals in the first category make all the headlines thanks to the large price tags, but those in the second category should not be ignored as an indication of the growing maturity of open source vendors.

Additionally, while the volume of deals is obviously significantly smaller, it is worth considering the increase in open source M&A activity in the context of reduced M&A activity in the wider tech market.

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Comments (7) Categories: Funding,M&A,Software

7 Responses to “M&A activity is the new VC funding”

  1. I would add Iona’s acquisition of LogicBlaze to this list.

  2. Indeed. This list was just those announced in Q3, but Iona/LogicBlaze is on the larger list, which I’m hoping to do something with soon.

  3. 2008 The Year of the Acquisition: Microsoft Bids on Yahoo!, Amazon ……

    New post at socializedsoftware.com…

  4. [...] Is 2008 going to be the Year of the Acquisition? Activity in 2007 was on the rise but now things seem to be at full speed. [...]

  5. [...] Hat: open source consolidator Matthew Aslett, October 25, 2007 @ 9:35 am ET A few weeks ago I mentioned the amount of merger and acquisition activity in the open source sector in recent years and that it [...]

  6. [...] the subject of exit strategies, we previously noted that the big money for established open source vendors went on M&A activity rather than [...]

  7. [...] time ago I mentioned that the spate of open source mergers and acquisition could be separated into two categories: open [...]