Credit Woes Whack Tech M&A

During that period, the company's ratio of long-term debt to total capital jumped from 5% to 54%, according to the study by the Center for Financial Research and Analysis.

In a recent conference call, ACS' management expressed confidence in its ability to use acquisitions for growth. But credit rating agencies Moody's and Standard & Poor's have already downgraded ACS' creditworthiness because of its heavy borrowing.

This could force the company into spending cash on its balance sheet rather than relying on pliant debt markets.

Smaller tech companies have also joined the fray to borrow money for acquisitions.

Macrovision (MVSN Quote), for one, which makes copyright protection software, used debt to help finance $195 million in acquisitions over the past three years. Its ratio of debt to total capital has risen to 34% from nearly zero over that period of time.

Companies with heavy debt loads may face burdensome interest payments if they have to issue new bonds to replace those coming to term.

"If companies have debt that is maturing, the issue is whether they have enough cash on their balance sheet to retire the debt, and if not, are they going to be able to refinance it in the current market environment," says Robert Stimpson, a growth investor and manager of Oak Associates' River Oak Discovery Fund and Rock Oak Core Growth Fund.