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
declinederivatives

US WLAN enterprise market falls 5.4 per cent in Q1 2015

Education market delayed WLAN spend due to expected 2Q 2015 E-Rate funding

Good to Great

Greatness may be just a few percentage points away

Forget 80/20; there’s a new rule in town, and following this one can mean the difference between just getting by and creating real value

Concept image of a cloud question mark

Cloud calls for new reseller business models - partner

Partner talks important cloud trends for resellers to note

conversation

HP: CIO conversations 'critical'

Avoid "hogwash" and "baloney" and meetings with lieutenants, vendor advises

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

Channelnomics' top five stories of the week - 29 May 2015

Check out which articles grabbed the most attention this week

Jessica Meek

Editor’s voice: The week’s channel chatter – 29 May 2015

What’s been happening this week on Channelnomics?

horse-riding444

MSPs take the reins on moving to the cloud

MSPs insist it is their own responsibility - not vendors' - to make the transition

Broken Links

Survey: Disconnects in MSP Selling Approach

LogicNow says managed service providers and IT departments aren't aligned on priorities, resulting in lost sales opportunities. The prescription, however, could prove problematic in the short term