According to EY’s Global technology M&A update: January-March 2015, record-setting technology M&A continued to set new post – dotcom – bubble highs in 1Q15 for both quarterly value and volume. Technology deal-making was fueled by technology-enabled digital transformations from corporate technology and non-technology buyers alike, which continue to disrupt multiple industries.
The first quarter of 2015 featured a return of big-ticket corporate deals but a decline in private equity (PE) activity. Although, the first quarter is typically the weakest for global technology M&A, 1Q14 set a post-dotcom-bubble 1Q record and 1Q15 has climbed 16% higher than the year-ago quarter with aggregate value ofUS$77.1b. This marks the highest-ever post-2000 quarterly total. Even though PE buyers were mostly on the sidelines in 1Q15, non-technology buyers more than picked up the slack. At US$19.5b, they more than doubled their 4Q14 total and increased more than six times over 1Q14.
This quarter saw health care IT (HIT) average value rise above all other deal-driving trends because of a single deal that exceeded US$10b. Meanwhile IoT tripled in aggregate value over 4Q14 on the strength of several IoT-flavored semiconductor sector consolidation deals. Likewise, values for security, big data, payment and financial technologies, smart mobility and cloud/SaaS also rose over the previous quarter, but values for gaming and advertising and marketing targets declined.
Jeff Liu, Global Technology Industry Leader, Transaction Advisory Services at EY, says:
“The ‘blur’ between tech and non-tech that we see in 1Q15’s record-setting technology M&A will accelerate. The Internet of Things shows why: it drives the integration of digital sensors, processing, connectivity and security into virtually every industry’s products. And that pushes tech companies to deliver more comprehensive solutions — increasing blur and spurring more M&A.”
Other key highlights:
- 1Q15 aggregate value of disclosed-value deals hit US$77.1b, higher than any quarter since 2000. That’s up 16% YOY and 72% sequentially.
- Quarterly deal volume climbed to 981 deals in 1Q15. That’s up 29% YOY, 2% sequentially and a fifth consecutive post-dotcom-bubble quarterly record.
- The IoT and HIT were the biggest deal-value drivers of 1Q15, followed by cybersecurity, financial and payment technologies, smart mobility and the cloud.
- IoT accelerates cross-industry technology blur by adding network-enabled digital sensors to other industries’ everyday products.
- PE volume and value declined, while non-technology buyers increased value, again, after a strong 4Q14.
- Cross-border aggregate deal value more than doubled YOY and jumped 59% sequentially; it captured a 42% share of total quarterly value.
Looking ahead: robust deal-making expected
Liu says: “We expected a strong start for global technology M&A in 2015 — but not quite this strong. Non-technology buyers were the wild card: they usually start slow and build throughout the year, but they were a major factor in 1Q15. It’s a sign the blur we’ve talked about for years is taking off, fueled by IoT and digital transformation and enabled by universal cloud adoption and a growing need to add cybersecurity to a wide range of products and services. This will set the stage for another blockbuster year in 2015 for tech M&A.”
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