Tough Tech M&A Scene Has Trendy Bright Spots

Pressured by a challenging global economy, technology mergers and acquisitions continue their downward, but a few M&A bright spots remain in trending areas familiar to most successful channel players.

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  

Pressured by a challenging global economy, technology mergers and acquisitions continue their downward, but a few M&A bright spots remain in trending areas familiar to most successful channel players, according to a new report. The long-term outlook for M&A activity remains strong, analysts said.

Ernst and Young Global Ltd.’s Technology M&A Update, released yesterday, shows the value of technology acquisitions down 52 percent from last year to a total of $28.2 billion. While disheartening, the report does show continued significant M&A activity among companies focusing on smaller deals driven by trends in mobility, cloud computing, social networking, health care and Big Data.

Related articles

In fact, both the volume and value of cloud and software-as-a-service (SaaS) deals remained significantly higher than any other deal driver in the last quarter. Mobile and e-payment technologies and health care IT also surged in value in the same period while social networking deals fell in value, but remained about equal in volume, the report found.

"Once again, the macroeconomic environment is challenging technology M&A. But unlike after the global downturn that began in late 2007, when deal values and volume both fell hard and fast, volume continues to grow, at least a little," said Joe Steger, practice leader for Global Technology and Transaction Advisory Services at Ernst and Young. “This is a real testament to the spreading strength of the social-mobile-cloud and big data analytics megatrends.”

Steger points out that deals related to the evolution of data center technology required meet the rigors of cloud computing, mobility and Big Data continue to rise despite the stagnant global economy.

“These are major forces and they are still driving technology company transactions. So, we'll continue to see many smaller strategic technology deals, and caution around executing large transformative deals until macroeconomic conditions and confidence improve. But the long-term outlook for global technology M&A remains strong.”

As part of the study, Ernst and Young surveyed 1,500 global executives and found both waning confidence in a global economic turnaround and a widening gap between buyers and sellers in potential M&A valuations. Forty-five percent of technology respondents expect M&A valuations to decline over the next 12 months compared to just 21 percent who held that view six months ago. The pessimism is balanced, however, by the fact that many companies still have a cache of funds they’ll want to use in the short term to make investments in what they consider innovative technologies.

"While most of the ingredients necessary for a deal recovery remain in place – plentiful cash reserves, adequate credit availability and transformative technologies – one element remains elusive: economic confidence. Without it, the M&A market will continue to be constrained by conservatism. This is especially true for larger deals," said Steger.

  • Tweet  
  • LinkedIn  
  • Facebook  
  • Google plus  
  • Send to Kindle
  • Send to  
More on Channel Business
Rejected Link Request

Salesforce CEO: SAP rejected our partnership

Marc Benioff said he attempted to collaborate with competitor

hired-hire-join-appoint-appointed-rubber-stamp-rubberstamp

IBM appoints new Global Business Partners VP

Michele Stern tasked with bringing $5bn in revenue

communication1

Communication breakdown: Getting vendor marketing and partner sales on the same page

Channel players talk struggles, consequences and solutions to poor communication among vendor marketing teams and channel sales teams

wires

HP to focus on wired, wireless to take market share from Cisco

Meg Whitman says there is opportunity to capture Cisco-dominated market

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
newspapers-and-glasses

Channelnomics' top five stories of the week - 3 July 2015

Check out which articles grabbed the most attention this week

jessica-m-225x300

Editor's voice: The week's channel chatter - 3 July 2015

What's been happening this week on Channelnomics?

Microsoft Surface Hub

Microsoft going big with partners on Surface Hub launch

Partners report strong demand for the wall-mounted collaboration device, anticipate even more opportunities when application development program rolls out in September

communication1

Communication breakdown: Getting vendor marketing and partner sales on the same page

Channel players talk struggles, consequences and solutions to poor communication among vendor marketing teams and channel sales teams