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Global technology M&A update - 2Q11 highlights - Innovative trends driving technology M&A deals - EY - Global

Global technology M&A update: 2Q11 highlights

Innovative trends driving technology M&A deals

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Global technology transactions scorecard, 2Q11

Source: EY analysis of FactSet Mergerstat data, accessed 6 July 2011; "Multiple" data accessed via Capital IQ and FactSet Mergerstat, 2 August 2011.

"In this quarter we saw established companies make big-ticket bets on disruptive innovation technology trends that have been developing for the last several quarters."Joe Steger, Global Technology Transaction Advisory Services Leader for the global EY organization

The second quarter of 2011 was dominated by big-ticket deals, with cloud computing, smart mobility, sector consolidation, the smart grid, solar energy and internet and mobile video the trends behind 2Q11's ten $1-billion-plus transactions.

Smart mobility

Following 1Q 2011, where we saw many deals around internet and mobile video technologies in multiple sectors, 2Q 2011 saw a smaller volume of such deals but one whopper: an $8.6 billion transaction that was the largest of the quarter. Another aspect of smart mobility also appeared in the quarter's top 10 deals: a $1.2 billion transaction in which a provider of communications equipment to public networks is acquiring a company whose software helps fixed-line and mobile network operators better manage the increasing bandwidth demands placed on them by smart mobile devices.

Cloud computing and SaaS

Cloud computing and software as a service (SaaS) deals were pervasive across the computing spectrum in the second quarter. For the second consecutive quarter, the top 10 deals of 2Q 2011 included a telecommunications network operator acquiring a data center operator specializing in cloud services; this quarter's deal was valued at $2.3 billion. Dozens of cloud/SaaS deals were seen in multiple sectors.

Semiconductor consolidation

Two of the top 10 deals of 2Q 2011 represented slightly more than $10.9 billion in semiconductor sector consolidation. These include a $6.1 billion deal bringing together two analog chip makers and a $4.8 billion deal between two makers of semiconductor manufacturing equipment. The latter deal involves chip-making equipment as well as gear for making high-efficiency solar energy panels.

Energy efficiency

The use of smart grid technology drove two top ten deals. The largest was a $2.3 billion deal that is part of a vision in which the cloud becomes a forum for integrating information from multiple "social infrastructure" systems that today operate separate, independent information systems. The second was a $1.4 billion deal focused on the integration of smart metering technology for more efficient management of power networks.

Other significant transaction drivers

Other significant deal drivers in 2Q 2011 included: security, social networking, business analytics and health care IT. Of note — the integration of social media and business analytics functions were a key aspect of internet and software sector deals involving advertising and marketing technology platforms. Online gaming also continued to be a major focus of internet sector transactions.

Most of the approximately four-dozen health care IT transactions in 2Q 2011 focused on monitoring, management, record keeping and analytics — part of a larger trend we expect to grow as companies look to make sense of the ever-increasing mass of data that is generated by business systems, mobile applications, social networking platforms and smart metering systems.

Global top 10 deals, April-June 2011
(corporate and PE)

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