Expect More Tech Acquisitions in 2014

We'll see more acquisitions over the next five years than we have over the past 10.

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I believe we are heading into an extremely aggressive period for mergers and acquisitions. The news of Google buying Nest and Lenovo buying Motorola is just the beginning. The environment is right for more deals of this nature.

If we’re to expect a period of intense mergers, the first thing history tells us as an indicator is that we’re coming off a very deep recession. One of the first things many companies cut during rough times is research and development. The other is marketing. When both these budgets get cut, it tends to put companies behind when it comes to investing for the future. Once times start to get better, as is happening right now in many economies, companies need to catch up on innovation after research and development cuts. The other thing they have to do is spend more time getting their brand and products back into the public mind-share. Acquisitions are a way to do both these things. Strategic and targeted acquisitions help companies get back some of the time they lost due to budget cuts during tough times.

In Lenovo’s case, it acquired Motorola to help gain a clear presence in the U.S. market. Lenovo would have had to spend quite a bit of money developing its U.S. brand with huge marketing spends in order to compete. By acquiring Motorola, Lenovo now has carrier deals in place and a well-known U.S. brand to help get it jump-started in the market.

The other thing that sticks out when you look at the picture of the global technology industry is that many companies have more than a little catching up to do. In certain markets like the the western ones, you see a picture that tells the story of Apple and Samsung dominating. Globally, you see that Apple and Google have both won the platform wars, as they are the only two relevant mobile platforms for tablets and smartphones in markets all over the world. The other thing you see: many companies struggling in markets like PCs. There are a good number of global companies looking to get an edge and catch up to some of the dominant players, and one of the primary strategies for doing this is to acquire companies.

Whether they are looking to compete in their current markets or looking to compete in new markets, I expect large global companies to start spending aggressively.

The last thing that is a classic signal of an impending acquisition boom is a hot bed of quickly growing startup companies. We currently have hot startups focusing on hardware in categories like the connected home and wearables. We also have a huge number of innovative software companies making apps for enterprise and consumer markets. Many of these apps are acquiring millions of customers at record paces. Flurry reported last November that it had tracked over 30 app developers with over 20 million monthly active users and nearly 900 app developers with at least 1 million monthly active users.

These are the kinds of trends that signal that an intense period of acquisitions is upon us. Some will be big news makers like Google buying Nest or Lenovo acquiring Motorola. Some will be small and go largely unnoticed. But I’m certain that the environment is right, and we’ll see more acquisitions over the next five years than we have over the past 10.

Bajarin is a principal at Creative Strategies Inc., a technology industry analysis and market intelligence firm in Silicon Valley. He contributes to the Big Picture opinion column that appears here every week on TIME Tech.