Aside from Microsoft's (MSFT - Get Report) blockbuster $26.2 billion purchase of LinkedIn (LNKD) , Internet M&A has lagged behind cloud software application deals in the current cycle of tech consolidation.
The LinkedIn auction may be partly to blame for the drop off in online deals, Pacific Crest Securities analyst Evan Wilson suggested in a recent report. The process may have distracted companies like Facebook (FB - Get Report) and Alphabet (GOOGL - Get Report) from pursuing other acquisitions, he noted.
The Yahoo! (YHOO) auction is also occupying a number of parties that might otherwise buy up Internet properties.
Wilson suggested that Internet deals will occur, however, and suggests that Angie's List (ANGI - Get Report) , French online marketing tech company Criteo (CRTO - Get Report) and, of course, Yahoo! are the three companies most likely to be sold in the coming year.
Aside from the attention-hogging auctions of LinkedIn and Yahoo!, Wilson attributed the lopsided proportion of cloud deals to the appealing cash flow characteristics of Software-as-a-Service companies. Companies using the Saas model have recurring revenues. It can be expensive to break a contract and switch to a rival, adding to the stickiness.
"While EBITDA multiples can be attractive, cash flow produced by sub-scale Internet companies is notoriously weak, in our view," Wilson wrote.
Angie's List is undergoing a major shift in its model by lifting its paywall.
The company has been in the cross hairs recently.
TCS Capital disclosed an activist stake last summer, saying Angie's List should consider a sale or other actions to boost its value.
The company hired Best Buy e-commerce executive as CEO Scott Durchslag in September. Months later Barry Diller's IAC Interactive (IACI) made a $512 million offer, which Angie's List rejected. TCS Capital founder Eric Semler joined the board in March as part of a stand-still agreement.
The success of the transition to new pricing models could influence whether Angie's List remains independent. "[We] think any uncertainty around that success would force the company to take another look at a combination, and [IAC] continues to make the most sense," Wilson wrote.
Among the small- to mid-cap Internet names, the analyst suggested, data, traffic, technology, patents and talent often drive acquisitions.
Meanwhile, he wrote, Critero is the "best remaining data asset" on the Pacific Crest small- to mid-cap Internet coverage list.
If high-profile auctions have indeed distracted buyers of online properties, the Internet marketplace should quiet down a bit in the coming week. Yahoo! reports results on July 18, and could well have news on its auction.
Angei's List declined to comment, while a representative of Critero could not be reached Thursday. Yahoo! has publicly acknowledged its strategic review.