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Global technology M&A update - 3Q11 highlights - Trends driving deal activity and value - EY - Global

Global technology M&A update: 3Q11 highlights

Trends driving deal activity and value

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Can such robust technology M&A values be maintained in the face of continued macroeconomic uncertainty and extreme equities markets volatility?

Deal drivers

  • Cloud computing, smart mobility, information security and social networking continued to dominate deal-driving trends. In fact, as time passes we're seeing technologies related to these trends more integrated with each other — and with just about everything else.
  • Health care IT deal volume continued strongly, including a big-ticket $2.2 billion deal.
  • Business intelligence/analytics deals increased in the quarter, expanding across a range of applications and industry uses.
  • Internet and mobile video technologies, online and mobile games, solar energy technology and the integration of social networking functions into a range of other technologies also drove deals in the quarter.

A directional view of select
3Q11 deal-driving trends


Deal activity

  • At 759 deals, 3Q11 volume was 8% higher YOY but 2% down from 2Q11 (777 deals) and 4% down from 1Q11 (794 deals).
  • Although it was up 13% YOY, corporate deal volume has been declining since the beginning of the year, to 678 in 3Q11 from 701 in 2Q11 and 721 in 1Q11.
  • Although they were down 18% YOY, PE deals have been climbing in 2011, to 81 in 3Q11 from 76 in 2Q11 and 73 in 1Q11.
  • Our observed long-term directional correlation between deal volume and the NASDAQ Composite Index continued: the index fell 13% in 3Q11.

Total number of all
announced deals


Deal value

  • Aggregate announced deal value was $56.4 billion in 3Q11 — an increase of 22% YOY, 8% sequentially and the highest total for any calendar quarter since 2007.
  • At $221 million, the average value of deals increased 26% YOY (from $176 million in 3Q10) and 14% sequentially (from $194 million in 2Q11).
  • Two deals topped $10 billion in 3Q11 for the first time since the first quarter of 2000, which had three $10+ billion deals. In addition, average value was the highest since that same 2000 quarter (just before the dot-com bubble burst).
  • PE deal-makers increased values the most in 3Q11: aggregate value of PE deals increased 86% YOY and 82% sequentially to $14.6 billion in 3Q11, the highest quarterly total since the first half of 2007. Average value of PE deals increased 153% YOY and 74% sequentially to $584 million in 3Q11.
  • The aggregate value of corporate deals rose 9% YOY but fell 5% sequentially to $41.8 billion; the average value of corporate deals climbed 8% YOY and 1% sequentially to $182 million.

Global technology transactions
scorecard, 3Q11


Deals getting done

  • By sector, deal volume (combined corporate and PE) grew YOY in every sector except internet (-9%) and software (-5%).
  • Sequentially, all sectors increased in deal volume except internet, which was flat, and software, which declined 22% following a 2Q11 spike.

Deals by sector based on value
and median premium, 3Q11


Cross- border deals

  • At 277 deals, CB deal volume was 36% of all 3Q11 deals, down from 40% in 2Q11 but still ahead of 34% in 1Q11 and for all of 2010.
  • The aggregate value of CB deals was $21.3 billion, or 38% of aggregate value in the quarter (CB and IB), compared with 46% in 2Q11.
  • The average value of CB deals declined sequentially (-2%) and rose 6% YOY. This was a lower performance than all deals (CB and IB) (see second "Deal value" bullet above), following two quarters in which CB average value grew faster than that of all deals.

Cross-border deal value flow for technology
deals (disclosed value), 3Q11 versus 2Q11



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A directional view of select 3Q11 deal-driving trends

Total number of all announced deals

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

Global technology transactions scorecard, 3Q11

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

Deals by sector based on value and median premium, 3Q11

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

Cross-border deal value flow for technology deals (disclosed value), 3Q11 versus 2Q11

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

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