Cloud, Big Data lead the pack in M&A deals
The total value of all disclosed value deals grew 58 percent Year-on-Year (YOY) to $36.4 billion, according to Ernst & Young’s report on Global technology mergers and acquisitions (M&A). However, the deal volume fell 12 percent YOY and 5 percent compared to the previous quarter.
It is important for companies to align with the five disruptive innovation ‘megatrends’—smart mobility, cloud computing, social networking, Big Data analytics and accelerated adaptation. The report states these megatrends influenced the microcosm of global technology M&A’s in Q1 of 2013, as companies competed for market share and key technologies.
Corporate and private equity (PE) volume declined 12 percent and 13 percent YOY, respectively. However, PE volume increased 31 and corporate declined for the second consecutive quarter, by 7 percent.
“Macroeconomic pressures continued to hold down global technology M&A activity in Q113. We see gradual improvement in macroeconomic uncertainty. However, there is still a lack of confidence around doing large deals in the current economic conditions,” says Joe Steger, Ernst & Young’s Global Technology Industry, Transaction Advisory Services Leader.
Some of the deal drivers include mobile apps. There were nearly 60 deals in Q113 for mobile applications or related development technology. Concerns over conducting large transformative deals dominated the M&A landscape in Q113. Excluding the announced deal to take Dell private valued at US $24.4 billion, average value would be US $103 million, down 36 percent YOY and 47 percent respectively.
Social-cloud and big data analytics technologies began acting together to transform entire industries. For example, Q113 saw dozens of deals for mobile apps that generate social-network-based recommendations for users, deals for technologies to help network operators, e-payment or advertising and marketing deals. Also, throughout were deals for Big Data analytics technologies to improve the accuracy of recommendations, the optimisation of advertising and marketing campaigns and the efficiency of data networks.
Strong stock performance in 2013 suggests confidence in economic improvement. An overwhelming majority of technology M&A growth will continue to be captured by technology products and services related to the five transformative technology megatrends.
“Gradually improving macroeconomic conditions, improved confidence, increased stock market valuations and the need for companies to respond to the transformative impact of the five megatrends—mobility, cloud/ SaaS, social networking, Big Data analytics and accelerated adaptation—all point to a steady, gradual increase in technology M&A activity over the next several quarters,” says Steger.
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