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Attention M&A shoppers! Prepare for discounts in 2009.

That’s the message from a new report from research house The 451 Group.

Valuations on technology companies will be driven down by a “frozen” credit market that hamstrings private equity players and an uncertain economy that is prompting corporate acquirers to rein in spending, the report said. Meanwhile, tech companies, facing a difficult economy, are likely to seek to spin off non-core divisions and increase the supply of potential deals in the marketplace.

By the count of The 451 Group, there have been tech mergers and acquisitions worth $290 billion year-to-date compared to $481 billion for all of 2007. Of the 2008 total, private equity accounted for just 6 percent of the total versus 36 percent in 2007. Cisco Systems, one of the most prolific corporate acquirers announced only four deals in 2008, one-third of its average level over the prior three years. But the close to the year is not likely to put an end to M&A woes, according to the report’s author, analyst Brenon Daly.

“As we head toward year-end, the economic picture is undeniably ominous,” he wrote.

More than one third of technology investment bankers surveyed in November reported a decrease in their M&A pipeline.

Mr. Daly pointed out that while Nokia, Rackable Systems, Symantec and Verisign have divested or announced plans to divest some business lines, potential buyers may be scarce. Further, with the frozen initial public offering market eliminated as an option for sellers, prospective acquirers in some instances will be able to offer low-ball bids.

Market conditions also have set the stage for a role reversal among some privately held and publicly traded companies.

“In a sign of how mixed up M&A became this year, we saw several cases that reversed the traditional public-private deal flow,” Mr. Daly said. “Instead of a well-established, publicly traded company bending down to scoop up a startup, privately held companies went after their listed brethren… We expect more venture-backed companies to continue to shop on the public markets next year. The reason? Simple valuation arbitrage.”