Big technology companies may be weathering the worst of the economic storms, but mergers and acquisitions in the industry are suffering.

The total enterprise value of tech deals in the second quarter was roughly $31 billion, down 59% from nearly $75 billion in the year-ago quarter, according to a recent report from Updata Advisors Inc. Companies did 194 deals in the quarter, compared with 256 transactions in the previous period and 263 in the year-ago quarter.

Deal pricing is also feeling the pinch, with median multiples of enterprise value to trailing 12-month revenue falling 8% from a year ago.

Why the sharp drop? With the subprime and credit maelstrom continuing to roil the economy, buyers are being more patient and selective in their purchases, especially given the increasing number of targets, says Updata, a Reston, Va., investment bank that focuses on tech. The falling stock price of many public companies also is making potential acquirers think twice about using their shares to fund deals. Although companies with strong growth and cash flow remain in demand, they're not drawing the big, and arguably overpriced, acquisition offers common in 2007, a banner year for M&A.

Not surprisingly, smaller businesses are faring the worst during the downturn. "It is the smaller companies with flat or declining revenues and cash burn that are experiencing the pain of the distressed economy reflected acutely in their sell-side M&A processes," Updata says in its report.

The bleak numbers echo findings presented by UBS Investment Bank at its July 22 technology conference in Silicon Valley. Bankers at the event said they expect fees from technology deals to plunge this year. UBS estimates the global fee pool for all tech deals this year at about $3 billion, or roughly half the $6 billion earned in 2007.

Key trends to watch for amid the tougher M&A environment, UBS says, are increased dealmaking by strategic buyers; more midmarket transactions; a growing number of hostile deals and heightened shareholder activism; rising cross-border shopping; and, when credit markets improve, the return of financial sponsors to deal markets.- Alain Sherter

As tech bankers hunker down, the news is hardly any better for venture capitalists, with fundraising and investment also sinking in recent quarters. But there is one consolation amid the gloom: exit returns.

A recent report from Thomson Reuters and the National Venture Capital Association tracking one-year performance of private capital investments for the first quarter showed positive returns across all stages. Putting its most positive spin on things, the NVCA noted that with no initial public offering market to speak of and the volatile M&A environment, short-term returns, while paltry, remain far better than those provided in the public markets. Indeed, with the weighted results from large late-stage deals thrown in, venture capital returns across all stages beat the Nasdaq and S&P 500 indexes over one-year, three-year, 10-year and 20-year horizons. - Clifford Carlsen

During a recent meeting with the San Francisco Chronicle's editorial board, T. Boone Pickens called Yahoo! Inc.'s management "pathetic." It's no secret why he's furious. The veteran corporate raider and investor in late July sold a 10 million share stake in Yahoo! at a loss after the Sunnyvale, Calif., company failed to strike a deal with Microsoft Corp.

Pickens may want to direct some of his ire at fellow raider Carl Icahn, whom Yahoo! recently added to its board of directors in settling a proxy fight. Pickens has acknowledged following Icahn's lead in sinking money into Yahoo!, presumably to make a quick buck on what he figured was a sure deal. You win some, you lose some. - David Shabelman