Tough Tech M&A Scene Has Trendy Bright Spots

  • 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.

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  

Want to keep on top of all the North American channel news?

More on Channel Business
shadow-banking-web

Shadow IT brings ups as well as downs

While shadow IT poses a threat for solution providers, there are advantages to be found as well

mock3-0913

Channel millennials to learn from older peers with new CompTIA initiative

Initiative may help with 2015 emerging threat of millennial expectations

NY traffic lights

Gigamon launches partner program

Traffic visibility firm includes pre- and post-sales training certifications in new partner program

Sales online and in the shops

Black Friday wearable tech uptake splits industry

Shoppers may have snapped up a bargain wearable device on Friday, but just how much impact will this have when they choose to wear it to work today?

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
jessica-m-225x300

Editor's voice: the week's channel chatter

What's been happening this week on Channelnomics?

A bunch of zombies

Exposing the fallacy of zombie Windows XP

Should partners be concerned that their desktop and laptop fortunes are being menaced by an operating system that just won't die? Short answer: No

Road to city

Evolution to as-a-service a rocky road for VARs

The much-discussed service provider route does not come without repeated bumps in the road for solution providers

team-of-toy-figures-putting-a-final-jigsaw-piece-into-place

EMC’s VMware remains intact — for now

Amid a rapidly consolidating and converging technology market, the storage giant staves off the spin-off of its virtualization software arm and stays ‘whole’