Global technology divestments grew 37% in the last year, driven by digital transformation

London, 9 March 2017

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  • Mega-divestments, valued at more than US$1b, increased 300% between 2015 and 2016
  • 80% of global tech executives surveyed by EY say digital transformation is influencing divestment plans
  • Hardware was the major driver of 2016 activity

The global technology sector experienced unprecedented divestment activity in 2016, according to the technology findings from the EY Global Corporate Divestment Study. The volume of global technology divestments valued at more than US$100m grew 37% from 2015 to 2016. Mega-divestments, valued at more than US$1b, rose by 300% last year to 28, up from just seven in 2015.

The study surveyed more than 180 senior and C-suite technology executives between October and December 2016. Of these, 80% agreed that “digital transformation” is influencing divestment plans. In addition, 67% of respondents cite underlying industry trends, such as cloud and software as a service, as driving factors.

While software and services featured prominently in last year’s top 10 divestments, EY figures show hardware was the major driver of 2016 activity. Among divestments valued at more than US$100m, 30 were of hardware businesses, nearly doubling the 17 seen in 2015.

For a sector historically slow to divest, 2016 saw something of a divestment boom in technology. However, our survey results suggest that most tech firms are not planning significant divestment activity in 2017. Just 27% of tech executives in this survey expect to divest in the next 24 months — much lower than across all sectors, where 43% expect to divest over the next two years.

Barak Ravid, Managing Director, Co-Head Technology, Parthenon-EY, says:

“Divestment of non-core businesses is an effective way to streamline the core business and raise needed capital to support growth. Those who continue to serially acquire without engaging in healthy portfolio pruning will be less prepared as the next wave of disruptive forces — including machine learning, intelligent things, blockchain and augmented reality — reshape the technology sector.”

To view a full copy of the technology findings from the EY Global Divestment Study, visit: divest.ey.com/technology.

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This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About Parthenon-EY

Parthenon joined Ernst & Young LLP in August, 2014. Parthenon-EY is a strategy consultancy, committed to bringing unconventional yet pragmatic thinking together with our clients’ smarts to deliver actionable strategies for real impact in today’s complex business landscape. Innovation has become a necessary ingredient for sustained success. Critical to unlocking opportunities is Parthenon-EY’s ideal balance of strengths – specialized experience with broad executional capabilities – to help you optimize your portfolio of businesses, uncover industry insights to make investment decisions, find effective paths for strategic growth opportunities and make acquisitions more rewarding. Our proven methodologies along with a progressive spirit can deliver intelligent services for our clients, amplify the impact of our strategies and make us the global advisor of choice for business leaders.

About the EY Global Technology Sector

The EY Global Technology Sector is a global network of more than 21,000 technology practice professionals from across EY member firms, all sharing deep technical and industry knowledge. EY member firms’ high-performing teams are diverse, inclusive and borderless. Their experience helps clients grow, manage, protect and, when necessary, transform their businesses. EY member firms provide assurance, advisory, transaction and tax guidance through a network of experienced and innovative advisors to help clients manage business risk, transform performance and improve operationally. Visit ey.com/technology.

About the EY Global Corporate Divestment Study

The EY Global Corporate Divestment Study focuses on how companies should approach portfolio strategy, improve divestment execution and futureproof their remaining business amid massive market disruptions. The 2017 study results are based on more than 900 interviews with corporate executives, including 182 technology executives, between October and December 2016 conducted by FT Remark, the research and publishing arm of the Financial Times Group.