Technology M&A sets all-time value record of US$466.6b in 2016 driven by disruptive cloud, mobile, social and data analytics
New York, 23 February 2017
- Internet of Things (IoT) deal value tripled to US$103.4b in the last year; more than half (55%) comes from connected car deals
- Artificial intelligence (AI) and machine learning expected to drive dealmaking in 2017
Digital transformation drove global technology M&A in 2016 to an all-time value record, according to the EY Global technology M&A report: October-December 2016 and year in review. Aggregate 2016 deal value was US$466.6b, the highest value recorded in the industry, and 2% more than the prior record set in 2015 of US$459.6b.
In contrast to the full year’s deal value increase year-over-year (YOY), deal value in the fourth quarter declined 38% YOY to US$117.2b. Full-year deal volume declined 5% in 2016 to 3,796 deals and a 7% sequential 4Q16 drop to 844 deals was the second consecutive quarterly decline seen since 2012.
Jeff Liu, EY Global Technology Industry Leader, Transaction Advisory Services, says:
“The second-half slowdown in global technology M&A deal volume suggests tech companies are approaching a dealmaking plateau. But with digital disruption still in its infancy and the extraordinary growth of IoT-related deals, we don’t expect this dip in volume to translate into a long-term decline in dealmaking.”
2016 was a year of record semiconductor consolidation driven by IoT technologies, cross-industry “blur” from non-tech buyers, unprecedented cross-border deal value and record private equity (PE) buying:
- Semiconductor targets set a new aggregate deal value record of nearly US$125b in 2016, as IoT and automobile-driven dealmaking that arose in 2015 gained momentum.
- IoT deal volume increased 30% to 221 deals for the year and deal value tripled (+203%) to US$103.4b. Connected car-driven deals accounted for US$57b (55%) of total IoT deal value.
- Non-tech buyers acquired 23% of 2016 all-deal aggregate value (up from 12% in 2015). This increasing deal competition coming from buyers outside of the technology sector may be one of the factors supporting high deal valuations.
- Cross-border deal value set a new annual record in 2016, marked by a 147% YOY increase to US$67.8b in 4Q16 and a 63% increase for the year to US$208.2b.
- PE buyers had their fourth-highest quarterly deal value ever in 4Q16 at US$20.8b and also set a record for annual aggregate deal value with US$90.1b, up 61% YOY.
Liu says: “Massive disruption from cloud, mobile, social and big data analytics technologies drove global technology M&A to all-time value highs in 2016 and will remain strong drivers in the year ahead. But companies should prepare for new disruptions, including artificial intelligence and machine learning, which could push dealmaking even higher late in the year and in 2018.”
To view a full copy of the EY Global technology M&A report: October-December 2016 and year in review, visit: ey.com/technology.
- Ends -
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
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 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 technology M&A report: October-December 2016 and year in review
The October-December 2016 issue is based on EY’s analysis of The 451 Group M&A Knowledge Base data. Deal activity and valuations may fluctuate slightly based on the date the database is accessed. The full report is available at ey.com/technology.