Global technology M&A update: Q213 highlights

Rising PE, megatrends and their enablers drive Q213 technology M&A

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EY’s global technology update for the second quarter of 2013 shows a very mixed picture, with private equity (PE) deal-making soaring while corporate deal-making continued a three-quarter-long slide. Total deal volume declined, while the total value of disclosed-value deals was flat with the prior-year quarter.

Yet the value of strategic technologies was on prominent display in Q213, as innovation around the five megatrends (mobile-social-cloud, big data analytics and accelerated technology adaptation) drove most of the top 10 deals for the quarter.

The report also notes many small deals around three emerging categories of megatrend-enablers: application programming interfaces (APIs), “devops”* and mobile back-end as a service (MBaaS). Buyers targeting these technologies included CA Technologies, Facebook, IBM, Intel and Microsoft.

“Given the deal-driving force of the five transformative technology megatrends of mobile-social-cloud, big data analytics and accelerated technology adaptation, it might seem surprising that global technology M&A levels of activity aren't higher. But, there are a set of counterbalancing forces holding down the expected levels of activity. These include: chronic macroeconomic and geopolitical uncertainty, unresolved regulatory, fiscal and tax issues and valuation gaps. Collectively, these forces may be causing M&A to reset to lower levels of activity across all industries. That said — I expect the strength of the five megatrends to prevail in technology, resulting in slow, steady M&A growth.” – Joe Steger
Global Technology Industry Transaction Advisory Services Leader at EY

Highlights:

EY - Global technology M&A update: Q213 highlights

  • At $33.4 billion, aggregate value of all disclosed-value deals is flat year-over-year (YOY) and down 8% sequentially (primarily due to one Q113 deal).
  • Volume falls to 627 deals, down 14% YOY and 5% sequentially; it’s the lowest level since 2010, when Q110 and Q210 both posted 628.
  • Private equity (PE) deal value soars 208% YOY to $13.9 billion; PE volume increases for the second consecutive quarter, up 10% YOY and 24% sequentially.
  • Corporate aggregate value falls 32% YOY to $19.5 billion, the lowest level (in other than a seasonally low first quarter) since 2008; corporate volume (570 deals) hits its lowest level since 2009.
  • Cross-border (CB) deal volume and value continue to decline: value falls 63% YOY to $6.4 billion and volume declines 24% YOY to 195 deals.
  • Q213 had the highest-value deal targeting advertising and marketing technology since 2007.
  • Information security returned as a top 10 target for the first time since Q411.

Total number of all announced deals

EY - Global technology M&A update: Q213 highlights ×

* “Devops” is a contraction of development and operations describing a software development method linked to lean start-up methodology that aims to enable greater frequency of new software releases.