Rapidly changing technologies affecting businesses and business models caused major growth in global technology M&A deal volume and value in 1Q 2011.
A comprehensive overview of statistics emerging from first quarter 2011 global technology transactions shows the trends, activities and deal values that shaped the quarter’s deal-making.
M&A deal drivers
- Technologies relating to smart mobility, social networking and cloud computing continued to top the list of deal-driving trends in 1Q11.
- Deals involving internet and mobile video technologies spiked in 1Q11.
- Integration of social networking functions into enterprise applications and advertising/marketing systems also drove deals.
- Non-technology companies purchased 15% of 1Q11 total value — the same percentage as in all of 2010, but a big jump from 8% in 2009.
- Other significant deal drivers include storage, security, e-commerce, health care information technology (HIT), online and mobile games, solar energy and advertising and marketing.
Select 1Q11 deal-driving trends
Cloud/SaaS and security deals had the highest average values among top deal-driving trends; smart mobile apps and social networking had the highest deal numbers.
Source: Ernst & Young analysis of FactSet Mergerstat data, last accessed 8 April 2011.
M&A deal activity
- At 794 deals, 1Q11 is 26% higher than 1Q10 (628 deals) and 13% higher than 4Q10 (702 deals).
- 1Q11 is the eighth consecutive quarter without a sequential decline in deal volume, beginning with 2Q09.
- PE deal volume grew 30% YOY and 20% sequentially to 73 — second-highest to 3Q10 (99 deals) since before the downturn began in early 2007.
- Our observed long-term directional correlation with the NASDAQ Composite Index continues in 1Q11: the quarter’s growth in deal activity corresponds to a 5% increase in the Index for the same period.
- By sector, the volume of deals announced (combined corporate and PE) grew YOY in every sector except internet (-12%) and software (-2%).
- Sequentially, all sectors saw an increase in deal volume.
Deals by sector based on value and median premium, 1Q11
Based on available data, internet and semiconductor companies received the highest premiums in 1Q11.
CE = Communications equipment
CPE = Computers, peripherals and electronics
* Based on sector of buyer, except PE and non-technology buyers (deals aligned by sector of the seller).** For deals greater than $100m involving the acquisition of a public target; CPE and internet is based on one deal only.
Source: Ernst & Young analysis of FactSet Mergerstat data, last accessed 8 April 2011.
M&A deal value
- Total announced deal value is $27 billion — 124% higher YOY than $12.1 billion in 1Q10 and the highest total for a calendar first quarter since the global economic downturn began.
- Average value of deals increases 49% YOY to $101 million in 1Q11 from $68 million in 1Q10, but declines 17% sequentially from $121 million in 4Q10.
- A trend begun late in 2010 continues: 1Q11 has a larger volume of smaller deals than the sequentially previous quarter.
- Total value of corporate deals rises 147% YOY to $25.2 billion in 1Q11 from $10.2 billion in 1Q10; average value of corporate deals rises 61% to $100 million in 1Q11 from $62 million in 1Q10.
- Total value of PE deals declines by half a percent YOY, but rounds to $1.9 billion in both 1Q11 and 1Q10. Average value of PE deals declines 23% to $105 million in 1Q11 from $136 million in 1Q10.
Total value of announced deals by deal value, 1Q11 vs. 1Q10
More small deals suggest spreading strength in global M&A over the past two years. $1 billion+ deals created the biggest increase in total value YOY, but at the other end of the spectrum the chart shows a 55% YOY increase in deal number and a 106% increase in deal value for deals with disclosed values less than $100 million.
Note: percentages may not total 100 due to rounding.
Source: Ernst & Young analysis of FactSet Mergerstat data, last accessed 8 April 2011.
M&A cross-border (CB) deals
- At 269 deals, CB deal volume was 34% of all deals — the same percentage as in all of 2010 but an increase from 31% in 2009.
- Total value of CB deals was $11 billion, or 40% of the total value of all deals, compared with 41% for all of 2010 and 25% for 2009.
- The average value of CB deals increased faster than that of all deals. It grew 89% YOY to $104 million in 1Q11 from $55 million in 1Q10, while the average value of all deals grew 49% YOY.
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