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Global technology M&A update - 1Q11 highlights - Cloud computing drives technology M&A transactions1 - EY - Global

Global technology M&A updateCloud computing drives technology M&A transactions

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“Despite lingering concerns about security, privacy and regulatory, legal and compliance issues, we expect cloud computing adoption to continue accelerating. It is one of several disruptive innovations that will drive increasing deal activity for the rest of the year.”

  Global Transaction Advisory Services Technology Industry Leader, Ernst & Young

Cloud computing is gaining acceptance for critical business data and applications. As it does, merger and acquisition (M&A) transaction activity is increasing around technology that supports the cloud and software-as-a-service (SaaS).

Technologies supporting cloud and SaaS are driving deals

Technologies related to cloud and SaaS were among those at the top of the list of deal-driving trends in the first quarter. Cloud computing drove at least three dozen deals. The average value per deal (with a disclosed value) was more than $200 million in 1Q 2011.

Deals were often driven by established companies buying cloud/SaaS technologies they need to plug product or service line gaps and catch up to customer demand – whether that demand is anticipated or already manifested.

Blurring of cloud, social media and mobile trends

Several transactions in the first quarter illustrated the blurring of cloud, social media and mobile trends we've seen for the last year.

Highlights of global technology deals related to cloud computing in 1Q 2011 included:

  • The biggest-ticket cloud computing deal in the quarter enhanced the publicly stated cloud strategy of a US phone network operator, increasing the operator’s ability to deliver cloud-based applications and services by adding data center capacity in the US, Europe and Latin America.
  • Separately, the largest deal of the quarter also had a cloud computing connection: A PC-oriented hard disk manufacturer acquired storage technology suitable for servers in the cloud as well as for enterprise data centers. 
  • Cloud-related deals this quarter involved internet, mobile video, security,
    e-commerce, online gaming as well as advertising and marketing technologies. Likewise, cloud computing deals were done by acquirers in nearly all technology sectors.
  • Technologies targeted at evolving companies' ability to deliver, support and develop applications on cloud computing platforms varied widely. Storage was one of the most significant, as companies and data centers prepare to provide multi-tenant hosting and to warehouse the massive quantities of data cloud-based apps generate.

Our Global technology M&A update, January–March 2011 is a comprehensive report on the industry’s transaction activity in the quarter. It provides in-depth analysis of the quarter’s statistical results and deeper dives into the above trends.  

Executive bytes is a related and ongoing series where we take a closer look at what’s happening in specific segments of the technology sector.

More about Executive bytes contributor: Joe Steger

Global technology M&A update

The first quarter started strong for global technology M&A. As technology innovations steer society toward a “smart world,” we anticipate a good year. Learn more about today’s trends.




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