Technology Capital Confidence Barometer

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Technology companies see little immediate prospect of a recovery for the global economy, according to our latest working capital report.

In spite of a broad lack of economic confidence, waves of transformative technology innovation, including advances in social, mobile, cloud and big data, continue to push the industry forward.

While the situation has stabilized in most local markets for technology companies, many executives expect this downturn to endure for at least a year and most expect it to persist for one to two years, while some expect it to last even longer.

The Eurozone crisis and slowing growth in emerging markets, such as China and India, have dampened global economic confidence and expectations around corporate earnings. As a result, we found that the focus on growth in the near-term will be mainly organic as the appetite for very large M&A deals has declined.

Contributing to the lack of confidence around M&A activity is the sentiment held by many technology executives that acquisition targets are overvalued.

Transformative technology pushes forward

In spite of a broad lack of economic confidence, waves of transformative technology innovation, including advances in social, mobile, cloud and big data, continue to push the industry forward.

In fact, most of the ingredients necessary for a deal recovery are now in place - plentiful cash reserves, adequate credit availability and transformative technologies.

However, in the short-term, a significant decline in confidence could translate into lower technology company valuations, and reduced deal activity - even though the long-term prospects for technology M&A remain good.

Capital confidence recap

  • 75% think the global economy shows no signs of improvement.
  • 68% expect the downturn to persist for more than a year
  • 45% view credit availability as stable, while more view it declining than improving
  • 20% are planning an acquisition within 12 months, down from 32% in April
  • 45% expect valuations to decrease over the next 12 months
  • 90% of those planning to do deals will do a deal of US$500 million or less

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