A directional view of select 2Q11 deal-driving trends

Note: average deal value is based on the value of disclosed value deals, while number of deals includes both disclosed and non-disclosed value deals noted for the given trend.
Source: Ernst & Young analysis of FactSet Mergerstat data, accessed 6 July 2011.

Deals by sector based on value and median premium, 2Q11

Source: Ernst & Young analysis of FactSet Mergerstat data, accessed 6 July 2011.

Total value of announced deals by deal value, 2Q11 vs. 2Q10

Source: Ernst & Young analysis of FactSet Mergerstat data, accessed 6 July 2011.

Security was the biggest deal driver in global technology M&A by volume in 2Q 2011, while internet and mobile video led to the single largest deal, at $8.6 billion.

A comprehensive overview of statistics emerging from second quarter 2011 global technology transactions shows the trends, activities and deal values that shaped the quarter's deal-making.

M&A deal drivers

• Security technologies led the pack of deal-driving trends from a volume perspective, crossing a wide range of applications from on-chip solutions to health care to mobile device management.
• Technologies relating to health care information technology (HIT), smart mobility, social networking, cloud computing, business analytics and video also were at the top of deal-driving trends in 2Q11.
• Internet and mobile video technologies led from a value perspective in the software sector due entirely to one $8.6 billion deal. In fact, online video was not included in the chart below because we counted only eight other deals, just five of which had disclosed values (averaging $9 million per deal).
• Recent deal trends in smart grid and solar energy technologies also manifested in big-ticket deals in 2Q11.
• We continue to watch business intelligence/analytics deals, four of which came in above $100 million; most (around a dozen or so) had non-disclosed values and focused on analyzing internet advertising/marketing data.

2Q11 deal-driving trends

M&A deal activity

• 2Q11 ended an eight-quarter streak without a sequential volume decline: it dropped 2% to 777 deals from 794 deals in 1Q11.
• YOY, deal volume grew 24% (from 628 deals in 2Q10).
• PE volume grew sequentially in 2Q11 — by 3 deals — to 76 deals, while corporate volume dropped 20 deals to 701.
• Our observed long-term directional correlation with the NASDAQ composite index continues in 2Q11: the quarter's 2% decline in deal volume corresponds to a slight decline (0.3%) in the index for the same period.

Deals by sector based on value and median premium, 2Q11

M&A deal value

• Aggregate announced deal value is $52.1 billion in 2Q11 — 69% higher YOY than the $30.8 billion in 2Q10 and the highest total for any calendar quarter since 2007.
• At $194 million, the average value of deals is the highest in 11 years — since the first quarter of 2000 (just before the dotcom bubble burst).
• Average value increases 39% YOY from $140 million in 2Q10 and 92% sequentially from $101 million in 1Q11.
• Aggregate value of corporate deals rises 71% YOY to $44 billion in 2Q11 from $25.8 billion in 2Q10; average value of corporate deals rises 41% YOY to $180 million in 2Q11 from $128 million in 2Q10.
• Aggregate value of PE deals increases 61% YOY to $8 billion in 2Q11 — the highest quarterly total since 2007. Average value of PE deals increases 21% to $335 million in 2Q11 from $277 million in 2Q10.

Total value of announced deals by deal value, 2Q11 vs. 2Q10

M&A cross-border (CB) deals

• At 311 deals, CB volume was 40% of all 2Q11 deals, up from 34% in 1Q11 and all of 2010 and 31% in 2009.
• Total value of CB deals was $24 billion, or 46% of all aggregate value in the quarter, compared with 40% in 1Q11, 41% for all of 2010 and 25% for 2009.
• The average value of CB deals increased faster than that of all deals for the second consecutive quarter. It grew 49% YOY to $229 million in 2Q11 from $154 million in 2Q10, while the average value of all deals (CB+IB) grew 39% YOY.

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