E&Y recently released its “first look” at its Global Technology M&A Report for the
fourth quarter of 2015. The year ended on a strong note for value,
setting the all-time record of an annual grand total of US$459.6
billion in technology deals. This number exceeds by a whopping 11%
the previous all-time record, set at the height of the dot-com boom
in the year 2000. Volume has increased year-over-year compared to
2014 by 14%, but it does not appear to have set any new records,
and in fact declined in the fourth quarter year-over-year compared
to 2014 and compared to the third quarter of 2015.
E&Y has noted that volume of non-tech buyer acquisitions
have continued rising through the last three months of 2015 despite
the slowdown of overall volume in the period. In fact, according to
the preview of the report, non-tech buyer value rose 124%
year-over-year. Non-tech buyers seeking technological investment
has been a recurring theme in recent technology M&A reports.
E&Y refers to this as the "blurring of boundaries"
and, noting that technological disruption of established industries
is still in its infancy and is only expected to gather pace,
predicts a continued growth in cross-sector deal-making.
Unlike cross-sector blur, cross-border value, despite being up
14% over the prior quarter (and an impressive 36% year-over-year),
only made up 14% of the total value of deals. In terms of volume,
E&Y reported a decline of 14% over Q3 and 5% year-over-year
compared to 2014. Of the cross-border value, a remarkable 75% of
acquisition funds came from U.S.-based buyers, while European
targets attracted a substantial portion of the cross-border funds
flow at just over half of all value in the quarter.
In technology sub-sectors, the stand-out performers ended up
being targets in the internet of things and cloud / SaaS space.
Volume in the internet of things space rose notwithstanding the
quarterly decline in all technology transactions. However, it is
worth noting that as a matter of comparison to other subsectors,
the volume of deals and, for that matter, the average deal value,
in the internet of things space remains on the lower end of the
sector. Cloud / SaaS deals, on the other hand, displayed both
outstanding volume and value, leading the industry in volume
overall and having the second highest average deal value (second
only behind deals in storage).
As a matter of outlook for the upcoming year, E&Y expects
that tech deal-making will continue to be strong in 2016, but may
"moderate" as a result of the rise of alternative
collaborative tie-ups in this sector. The full Q4 report and
overview of 2015 is expected to be published shortly, and should
prove an interesting read.
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