Heightened activity and global expansion in the multifaceted tech dealmaking world has Wall Street jockeying for position. Here's who's leading the charge.

For months, Tom Weisel — like several of his investment-banking colleagues who regularly exchange takeover rumors over egg-white omelets at Buck’s in Woodside, California, or lunch at the Sundeck on Sand Hill Road in nearby Menlo Park — had heard rumblings that Microsoft was quietly talking with Yahoo about a possible combination.

After all, if you’ve been around the technology space as long as the high-octane dealmaker of 40 years has, you’ve come to learn that everyone talks to just about everyone in the close-knit Silicon Valley circuit. But no one — not even Weisel — was prepared for the shockwaves Microsoft CEO Steve Ballmer sent through the tech industry on January 31 when he called up Yahoo CEO Jerry Yang to inform him that Microsoft would attempt to embrace Yahoo in an audacious $45 billion bear hug the next morning.

“It wasn’t so long ago that you didn’t see such big deals — and certainly not hostile ones — in the tech space, but you look now, and this was just part of the constant stream of M&A deals on a daily basis,” says Weisel, 66, who heads Thomas Weisel Partners, a growing tech-oriented banking boutique based in Menlo Park. “Even with this market meltdown, it’s happening all the time. The big guys have a lot of cash, and they’re looking for vertical integration. That offer just reinforced what’s been happening in the tech space.”

True, the markets may be in a subprime funk, financing for big-ticket leveraged buyouts has evaporated and the economy is tipping dangerously toward recession, but the technology deal sector is in the midst of a resurgence after looking moribund just six years ago. As Microsoft’s offer made clear, the business is bigger than ever — but even more important, it has grown far more sophisticated and multidimensional. Tech banking isn’t just back from the dot-com bust. It has, in many ways, grown up.

“This bid fits the pattern of all the activity we have seen building momentum in the tech space for some time,” says Chris Varelas, the global head of technology, media and telecom investment banking at Citigroup Global Markets, who plans to leave the firm and launch a tech-focused private-equity outfit (see “Changing Lanes,” page 90). “The recent difficulties in the credit markets have highlighted the fact that technology banking is not just healthy and growing but even more important to investment banks seeking future growth or [looking] to replace lost revenue streams.”

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