Global technology M&A update: 2Q14 highlights
We saw a record-setting volume of global technology M&A transactions in 2Q14.
Strategic deals, large and small, targeted technologies that empower human activity. This activity is being conducted via mobile devices, which include more ways to detect and share information. Additionally, the devices offer more ways to analyze that activity, anticipate it and respond to it, particularly through advertising and marketing channels.
Examples of this type of technology include mapping apps and wearable fitness technologies.
In short, 2Q14 technology dealmaking sets the stage for emerging economies comprised of omnipresent digital environments, sensing and responding to human activity and interests.
- At US$52.4 billion, aggregate value of all disclosed-value deals soars 57% year-over-year (YOY), despite falling 21% from a record-setting first quarter.
- Volume sets a second consecutive record for any quarter in the last 6.5 years we’ve produced these reports, rising 39% YOY and 15% sequentially to 872 deals.
- Corporate dealmakers drive the growth, increasing aggregate value 139% YOY toUS$46.6 billion and volume 41% YOY to 806 deals.
- Private equity (PE) deal value is US$5.9 billion, at about the middle of its typical range; PE volume (66 deals) falls 6% sequentially after five consecutive quarterly increases.
- Cross-border (CB) deal value is US$12.2 billion, taking a 23% portion of overall aggregate value — well below the historical CB average. But at 309 deals, CB volume is up 58% YOY and 34% sequentially.
Total number of all announced deals, 2Q13–2Q14
“Nothing less than a technology-induced reinvention of all industries has begun, moving toward ‘sense and respond’ relationships between businesses and their customers and driven by the five transformational technology megatrends: smart mobility, cloud computing, social networking, big data analytics and accelerated technology adaptation. At the same time, macroeconomic conditions are supporting dealmaking with low interest rates, appealing lending terms and stability in equities markets. This confluence of factors will continue to drive record, or near-record, global technology M&A for the foreseeable future.”
— Jeff Liu, Global Technology Industry Transaction Advisory Services Leader, EY LLP
- Big-ticket deals were diverse in terms of technologies targeted, though common themes emerged such as consumer focus and the buyer’s scale as a growth accelerator.
- Financial technologies grew again as a target, especially for point-of-sale and mobile payments.
- Deals targeting cloud/SaaS, smart mobility, big data analytics, security, advertising and marketing, storage, education and collaboration technologies all increased in volume faster than all deals.
- Divestiture deals continued to increase, but at a pace commensurate with global dealmaking volume growth.
With the first half behind us, there can be little doubt that global technology M&A is on course for a blockbuster year in 2014. In fact, the math suggests that 2014 aggregate disclosed value could top all but the year 2000, when the dotcom bubble drove technology M&A to heights not seen before or since. But even if values moderate a bit from the record-setting first half, 2014 global technology M&A will easily top the previous seven years for which we have combined corporate and PE data.