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Why 2021 is a Banner Year for Global Tech M&A Deals

M&A

The beginning of the COVID-19 pandemic brought many deals to a screeching halt, but the technology industry was a rare exception. Last year saw a steady flow of tech M&A deals in the global market that totaled $634 billion, marking a 91.8% increase year to year. Twenty-21 too seems to be a banner year for tech industry deals. In fact, the first half of 2021 has already broken global records for M&A deals that are worth more than $671 billion.

According to data from financial intelligence firm Refinitiv, as of June 30, businesses worldwide had closed over $2.8 trillion in mergers and acquisitions.

“Over the course of 40 years of tracking mergers & acquisitions, we’ve never seen deal-making at this pace, by value and volume,” Matt Toole, director for deals intelligence at Refinitiv, said, attributing much of the growth to trends that started before the pandemic, including tech industry consolidation, a greater number of private equity firms buying up companies and the merger momentum shows no sign of slowing.

“As fiscal, monetary, and regulatory policies become clearer over the course of the second half of the year, deal-making will have to adapt, but conditions seem favorable for the current momentum to continue,” said Toole.

The study also found that the tech industry accounted for nearly a quarter of all mergers and acquisitions in the first half of the year. Among the largest deals was Microsoft’s acquisition of speech-to-text software maker Nuance Communications for $19.7 billion, announced in April.

Here are some of the biggest tech deals so far in 2021:

Microsoft acquires Nuance for $19.7 billion, making the biggest acquisition so far this year. Microsoft revealed in early April that it would be purchasing AI and speech recognition platform Nuance that works primarily in the healthcare sector.

ServiceNow purchased the Indian robotic process automation company Intellibot in March. It says it hopes to build Intellibot into its own Now Platform, enabling the automation of more business functions.

UK-based software company Aveva acquired its US rival OSIsoft for $5 billion in March. Their combined strength will form one of the largest open standard-based industrial platforms in a market still dominated by proprietary systems.

Hitachi purchases GlobalLogic, a tech outsourcing company for $9.6 billion in March. The deal includes repayment of debt. Hitachi also benefits from GlobalLogic’s vast customer base such as Reuters and McDonald’s.

Dropbox purchases DocSend for $165 million. Dropbox acquired the secure document sharing business in early March to further tap the market for cloud file storage.

VMware purchases Mesh7, a security vendor, for an undisclosed sum.

Xero purchases Planday for €183.5 million. Xero, a small business accounting software firm, purchased Planday in a mixed stock and cash deal. Planday boasts an SaaS workforce management and rota scheduling business that works primarily with hospitality companies.

Square purchases Tidal for $297 million. Square will take a majority ownership stake in Tidal, a music streaming platform. Purchased by Jay-Z in 2015, it promises quality streams and better compensation for artists.

Okta acquires Auto0. Okta announced in March that it would acquire Auth0, an identity management competitor, for $6.5 billion. Auth0 was previously valued at just $1.92 billion in July while seeking $120 million in funding.

Atlassian purchases Chartio. Atlassian will purchase Chartio, a data visualization tool, for an undisclosed sum.

Autodesk buys Innovyze for $1 billion. Autodesk will acquire software manufacturer Innovyze, which specializes in programs to simulate, model, and analyze water infrastructure. A popular 3D modeling service, Autodesk is hoping to gain inroads in the water industry.

Cisco purchases Acacia for $4.5 billion. The deal originally announced last July, in which Cisco ended up paying an additional $1.9 billion to close the deal. Acacia sells high-speed optical systems.

The M&A activity quickly rebounded into 2021 as the economy began to recover and the momentum will continue, according to Gartner analysts.

By 2022, the level of global tech M&A providers will surpass previous highs recorded in 2018, it said.

“Market conditions for deal making will continue to improve as volatility stemming from COVID-19 subsides,” said Max Azaham, senior research director at Gartner.

“Tech CEOs pursuing acquisitions should anticipate increased competition for targets and take steps to gain advantages over other acquirers to earn seller acceptance,” warned Azaham.

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Sohini Bagchi
Sohini Bagchi is Editor at CXOToday, a published author and a storyteller. She can be reached at sohini.bagchi@trivone.com