The FT piece yesterday on corporate cash hoarding was fascinating. Apple alone has 10% of America’s corporate cash in its $146 billion piggy bank. Add Microsoft, Google, Oracle, Cisco and Verizon and you soon find 25% sitting in the tech space. Little wonder then that we see a willingness to splash the cash on M&A with the likes of Googles recent acquisition of smart energy business, Nest. The challenge is that most of this money is held in the wrong place as they all try to generate their profits in low tax countries rather than in the US (sounds familiar?) so there could be major tax leakage to repatriate the money to match the right targets.
When we regularly hear from PE firms that they make their best returns in tech maybe they should be ploughing a much bigger proportion of cash into corporate venturing and even mainstream PE. I am sure my tech clients would be flattered with an offer from Google Private Equity!