A Q&A with Ron Pillar: The Return of Tech M&A and Leaders In The Tablet Wars

Every day, it seems there’s a tech company being sold or rumored to be on the block. With so many deals, I thought I should reach out to someone with deep background in the sector.

Ron Pillar joined i-bank Sagent Advisors on Wednesday as an MD in the tech group. Before Sagent, Pillar was at Ladenburg Thalmann where he was vice chairman and co-head of investment banking.

Prior to that, he spent nine years at J.P. Morgan where he was head of technology investment banking. It was at J.P. Morgan that Pillar headed up the advisory team in the 2006 merger of Lucent Technologies and Alcatel of France. He also directed the $700 million IPO of Neustar as well as the $8 billion spin-off of Teradata from NCR Corp.

Even though it was his first day, Pillar took the time to speak to me by phone.

  1. We’ve seen a lot of tech deals, like 3PAR, Novell, recently. Do you think there’s a bubble in the tech sector? No, I don’t. I think there is a nice resurgence in the sector. But as far as public companies go, there has been a normalization of valuations but definitely not a bubble. Some of the cloud storage and security sectors have begun to achieve higher valuations but these areas are high growth areas. Typically, they will have higher valuations.
  2. There’s been a lot of talk about how the credit markets have rebounded so that a $10 billion deal is possible. But it’s December now and there has still not been a $10 billion deal: The deal market is definitely back. I’m not sure how quickly [a $10 billion deal] will happen. Both sponsors and strategics are starting to consider M&A as part of their strategic imperative again. I think this is due to the visibility of the market. People have gotten more confident. As opposed to any time in last 24 months, people have begun to see a light at the end of the tunnel. They can start to deploy a lot of cash out there. People are starting to turn to M&A as a strategic imperative.
  3. Some are saying the expiration of the Bush tax cuts are fueling many deals. What do you think? A lot of what you’re seeing today is driven by fundamental strategies. It’s not driven by tax issues. People are still being conservative but they are taking on M&A initiatives. But it’s at a measured pace.
  4. Are you as sick of the Google-Groupon rumors as I am? Do you think the deal, if it gets done, will be a game changer? I think it will be one of a series of transactions in the sector. The tech sector is constantly evolving and exciting. A lot of different players will continue to have M&A as part of their strategy and as their business models evolve.
  5. Are there any companies or sectors that you find most intriguing? There are sectors that are really interesting like cloud computing, security and wireless connectivity, which would include all sorts of wireless applications and devices. You are just seeing the phenomenal uptick in the iPad and new entrants into the tablet arena. Everyone is coming out with a tablet. There will be few winners. In the tablet market, Apple has clearly gotten a head start and defined the category but others will look to get in the game such as RIM and Hewlett Packard.
  6. Do you think the iPad, or tablets, and their applications are now their own sector? I’m not sure I would call it its own sector but maybe it’s a subsector with both computing and mobility.