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Last year saw a wave of consolidations across the media and technology sectors, and my view is that 2008 will see this trend continue, perhaps even more dramatically.

My hot category picks are:

• Mobile – particularly location-based devices and applications
• Energy and green technology
• Micro devices and nanotechnology
• Online video
• Social media
• Search engine optimisation

Many medium to large companies are struggling to keep up with new areas of specialist technology and organic growth strategies are just not keeping up. My colleague attended the Library House Mediatech event in November last year and quoted one of the speakers announcing that M&A is the new R&D, which sums up the prevailing attitude succinctly.

So you have a number of these switched-on companies keeping close tabs on smaller tech and media businesses ( including start-ups ), with a view to taking over the specialist technology and the trained specialists with it. Experts in the hot tech areas are increasingly hard to find, and buying a tranche of them in a single acquisition is sometimes an easier option.

Larger technology businesses have particularly highly active over the past six months. Witness Microsoft snapping up in November of UK-based Multimap, one of the world’s leading internet mapping businesses. Or Warner Bros recent acquisition of the UK’s largest independent interactive games publishers, TT Games. Nokia Siemens is about to swallow up Apertio, the telecoms data platforms provider.

Mid-cap companies are also starting to enter the arena in quantity and this is where I predict a new wave of merger activity over the next twelve months. ESRI (UK), the GIS ( geographic information solutions) company has just taken over the geospatial division of Tadpole Technologies. Ingram Micro has announced it is buying Paradigm Distribution, the point-of-sale (POS) technology company.

Pressure to create scale is also coming from the VCs who have backed the myriads of technology and media start-ups over the past two years, and are happier seeing no more than a handful of businesses dominate each sub-sector.

Whether the credit crunch continues or not, the driving forces behind the technology and new media industries are too strong to prevent a storming round of consolidations throughout 2008.

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It’s prediction season again; one just has to glance through any financial or business publication for lists of what’s going to be hot or cold in 2008, which shares are going to explode and where to buy or not to buy your next investment property.

As far as I can see, the only sure thing is that there will be a massive shakeout of futurologists.

But on closer inspection, if we limit our assessment to the more sober UK publications, we soon realise that not many have much confidence in the present state of the British economy.

So it was no surprise to learn of the results of a survey of 55 of the country’s leading economists by the Financial Times. Around 90% thought that the nation’s finances are in a poor condition. Over 60% thought that there will be significant falls in house prices this year.
The determining factor will be the availability of credit to banks and businesses, together with the impact of economic conditions in the Americas, Asia and Europe.

Any continued downturn in the UK economy will have a immediate impact on those businesses that have a higher reliance on debt.

Already we are seeing a rise in the number of corporate insolvencies – I predict a five year peak this year, with smaller businesses and the services sector dominating the figures.

Later this month the Business Sale Report will be releasing figures for administrative receiverships for the last quarter of 2007, and early signs are that the credit squeeze has had and will continue to have a sudden and fatal effect on many medium-to-highly geared private businesses.

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