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Global technology M&A update - 2Q11 highlights - EY - Global

Global technology M&A update: 2Q11 highlights

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Total number of all announced deals

Source: EY analysis of FactSet Mergerstat data, accessed 6 July 2011.

Big — and small — technology bets

Source: EY analysis of FactSet Mergerstat data, accessed 6 July 2011.

"The high values seen in the second quarter are a testament to the power of disruptive technology innovations occurring today and the high level of confidence in the future that's held by many technology executives." Joe Steger, Global Technology Transaction Advisory Services Leader for the global EY organization

The strong start in global technology mergers and acquisitions (M&A) seen in the first quarter of 2011 grew more robust in the second quarter. Big-ticket deals drove the aggregate value of technology M&A to $52.1 billion, nearly doubling the 1Q 2011 value.

Ten multibillion-dollar deals powered the increase, driven by industry consolidation and by ongoing disruptive innovation in areas such as cloud computing, smart mobility, internet and mobile video, the smart grid and solar energy.

Total number of all
announced deals
  • Total value of all disclosed-value deals increased 69% year-over-year (YOY) and 92% sequentially to $52.1 billion — the highest quarterly aggregate value since 2007, before the beginning of the global downturn.
  • However, deal volume declined 2% sequentially to 777 deals, breaking a string of eight quarters without a decline.
  • Average value hit $194 million — the highest level since the first quarter of 2000, at the tail end of the dotcom boom.
  • At $8 billion, private equity (PE) aggregate value is the highest since 2007.
  • Cross-border (CB) deals grew faster than in-border (IB): sequentially, aggregate disclosed CB deal value grew 118% and volume grew 16%, while IB deal value grew 75% and volume declined 11%.

Big — and small — technology bets

While the trends mentioned above were behind the quarter's top 10 largest deals by dollar value, they also drove hundreds of smaller deals in the quarter. "Importantly, even though 61% of all disclosed value was concentrated in the top 10 deals, we also saw significant deal-making strength at the opposite end of the spectrum, in deals less than $100 million," says Joe Steger, Global Technology Transaction Advisory Services Leader for the global EY organization.

Big — and small
— technology bets

Other technology trends driving 2Q 2011 deals

Other significant deal drivers for the quarter included security, social networking, health care IT and business intelligence/analytics.

"All these technologies continue to make a significant impact on M&A. However, security was the biggest driver by deal volume. As security issues continue to make headlines, companies may be looking to integrate security functions nearly universally throughout their products and services," Steger explains. These are the overarching trends that drove global technology M&A in 2Q 2011.

Technology M&A outlook: positive but clouded by uncertainty

Technology companies continue to deliver new waves of disruptive innovation, and that typically leads to an increased need for M&A. With that said, global economic uncertainty appears to have been increasing in 2Q 2011, so we won't be surprised to see values moderate in the coming quarter.

"After the strong first quarter start, we were concerned over increasing divergence between buyers and sellers over valuation, geopolitical unrest, the continuing US debt ceiling and government spending debate, global debt issues and other unforeseeable possibilities. Yet all these hurdles were overcome to produce a very robust second quarter. The big question now is whether deal-making will continue to overcome these macro obstacles or take a pause in the second half," Steger concludes.

Dive deeper into 2Q 2011 M&A

The following pages offer more detailed statistics and analysis on technology mergers and acquisitions:

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