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  
More on Channel Business
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?

Backbytes - a happy computer

Perk up! HP opens up former direct-only perks to the channel

Latest ServiceOne partner program released as Q4 results disappoint

Two men shake hands

Public offering: Ingram Micro and VMWare release new partner program

Public sector partners to benefit at no cost

learn-chalkboard

Watch and learn: Brocade EMEA merge watched carefully by U.S. arm

Benefits of channel and OEM business merge apparent in EMEA and APAC

Visitor comments
Add comments
blog comments powered by Disqus
In-depth
arthur-chang-pan-terra

Vendor Q&A Series: Arthur Chang, PanTerra Networks

The latest exec to sit in the Channelnomics hotseat is PanTerra Network's president and CEO

CCTV security

Post Sony hack, security appliance market remains red-hot

Growing security concerns continue to boost appliance sales

US soldiers running on a desert road during a military operation

Fight the good fight: VA enlists IBM's Watson for PTSD battle

Solution will focus on dealing with the large number of vets suffering from PTSD

davemaffei-vpofchannel-carbonite-2014

Vendor Q&A Series: Dave Maffei, Carbonite

The latest exec to sit in the Channelnomics hotseat is Carbonite's VP of global channel sales