Net Results / Karlin Lillington: Every year a plethora of reports and white papers from industry and government sources plonk onto my desk.

Setting aside the obvious caveats that go along with such things - potential biases or commercial interests, the sources of information, the analysis itself - I love these gatherings of facts, figures and opinions. Most - even the smallest survey of an industry segment - cast a little light into interesting corners.

Then there are those handful of reports that each year I look forward to (OK, yes; maybe I need to get out more, but I usually can't resist those graphs that plot industry ups and downs and trends, or the panels of statistics that are so time-consuming to track down that I'm thankful the report researchers freed me from the job).

One of my favourites is consultancy Hot Origin's annual report on Ireland's software cluster, which always appears just before the start of summer. I don't think any other report outside of the Irish Software Association report is quite as comprehensive on the software industry.

Many of the larger, international consultancies also do good work on slices of the Irish technology industry but these focus on very specific areas such as venture capital and the Irish portion is understandably small.

This year's Hot Origin report came out two weeks ago and there's plenty of meat for anyone trying to get more than just a snapshot but a fairly broad picture of where the industry on this island stands at the moment.

The element I found most intriguing is the report's focus on trade sales, mergers and acquisitions. One used to be able to say with confidence that it was far from M&As the Irish software industry was reared, but not so anymore.

While a key point in the report is that the level of M&A activity in the Irish market is surprisingly low - and we'll come back to that in a minute - the fact is that 10 years ago, there was hardly enough industry outside of the multinationals for there even to be talk of the NEED for more M&As.

The industry has certainly reached a point of maturity and capability when expansion in this way is being mooted as a necessary way forward. That's the good news.

The bad, or at least somewhat worrying, news is that M&A activity in the Irish market is well below European and US levels. This is despite the fact that the Irish software industry is, as Iona chief executive Dr Chris Horn pointed out at the report launch, primarily made of a large number of very small companies and only a very small number of large companies.

Irish software companies need scale to become more than little blips on the world software stage - indeed, to survive - and Dr Horn and other speakers at the launch expressed concern that this is not actively happening right now through M&As.

The total M&A activity in the Irish software market in 2003 is valued at €650 million in the report, a figure which at first glance seems quite impressive. But nearly half of that total comes from a single action - the management buyout at Riverdeep, valued at €320 million.

Deal values quickly fall off after that whopper at the top of the list.

The Rendina purchase of Irish company Alphyra is valued at €93 million, Irish company iTouch's purchase of Spanish company Movalisto is valued at €60 million, and the management team buyout of Conduit is worth €55.40 million. Deals then halve in value and continue to get smaller and smaller.

The most interesting reason cited by Hot Origin's Caroline Wardle for the lack of M&A activity in Ireland - and this is not her opinion but that of several chief executives surveyed for the report - is that of ego.

Many Irish companies feel they will suffer a loss of face in the indigenous industry to be seen as the acquiree rather than the acquirer. Or let me phrase that more precisely: many Irish chief executives feel that they personally will be less of a man or less of a woman if their company is not the one making the acquisition.

Can this be true? I spoke to several industry figures afterwards and they said that they felt this was likely to be a consideration - the Irish community is still very small and being acquired is seen as, well, not failure but nothing you can go crow about in the pub, even if you get plenty of cash to buy the rounds as a result.

Such an attitude to me falls into the same category as the schadenfreude expressed by some in the industry when an Irish technology company fails, and the national immaturity on our part to see failure as part of the entrepreneurial experience. Instead, there's still that little frisson of pleasure taken at others' misfortunes; the blinkered view of risk being something unclean.

Could we grow up a little, please? We are long past the point where such attitudes should have been consigned to the junkpile along with high corporate tax and the belief that no one will want to pay for broadband connections into the home.

On the M&A front, the report points out many reasons why companies should be seriously considering this particular way forward - a return of private equity to the markets, improving company performance, a need to acquire capability in areas where R&D might have been cut in leaner times, the pent-up demand for exits, the increasingly difficult initial public offering scene due to new regulations.

If this makes sense to your company, get talking and stop worrying about what others will think of you down in the pub.