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    December 17 @ 16:30 - 17:15

Spending the M&A Christmas Bonus

Last week I was in New York mixing holiday parties and client meetings while wrapping up my market surveillance technology report.  I also ventured into the deepest level of Dante’s Inferno (Toys R Us in Times Square) to buy a little train set for Christmas that I am now toting through airports like every other tourist.  Incidentally, I am now going to model my holiday Times Square proximity trips around the homeless guy getting off the elevator.  No showers for a week.  Talk about parting the Red Sea of otherwise oblivious humanity.

I digress.  So NASDAQ OMX bought FTEN and BNY ConvergEx bought RealTick.  That’s good stuff.  These companies weren’t quite at their apex, but they weren’t very far from it either.  I have to say, the more I think about SMARTS and FTEN surrounding risk management, the more I think someone at NASDAQ OMX had some vision.  What a fun product management job meshing those two solutions.  I suspect those deals will trigger a couple more.  July is coming quicker than it looks and pre-trade risk is going to be required reading for sponsored access.

Contrast that with the slew of EMS providers with for sale signs.  Nada.  Land of misfit toys from an investment perspective.  It isn’t that they don’t have a market or aren’t making money, they just aren’t the hot toys for the season.  Further, some of them are downright trés cher.

Ted and I sat down to chat about the FTEN acquisition.  Some of that conversation is client-confidential, but I don’t think he’ll mind if I talk about the generic investor stuff.  We traded stories of companies that had too many investors to sell and companies that didn’t have enough to sell.  It’s a delicate tightrope and Ted had to walk a little of it over the course of nine years building FTEN.  Same with figuring out where you are on the momentum spiral.  I spent a little time on Saturday walking through the Guggenheim.  Up through spiral staircase… (U2 reference for those not in the know).  The placement of the art in relation to the climb was important to the exhibit.  Same with when you sell.  It’s delicate. It’s as much art as accounting.  Wait too long and your audience loses interest or gets tired and turns around.

Here’s my advice.  Your audience has money to invest.  Look hard internally.  Do the gut check.  Are you spurious or authentic in where you are in relation to market demand?  Make sure you aren’t at the apex headed back down.  Think about where you fit in a solution that needs to exist in nine months based on regulatory changes, market demand, global and/or product opportunities, etcetera.  Look at your investor structure.  Are you going to be a nightmare to buy?  To integrate?  If so, you might want to lighten up the product roadmap and make some acquisition-position changes.  Christmas bonuses are here.

As an aside, this year’s annual CIO survey is upon us and response has been anemic.  If you enjoy my little freebie nuggets of capital markets technology truth, how about encouraging your senior technology friends at sell-side and buy-side firms to unwrap 15 minutes of their life to help me out.

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