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Report: Tech M&A Down 35 Percent Annually

Wed, 02/13/2013 - 9:32am
Ben Munson

The aggregate value of tech mergers and acquisitions (M&A) saw a worldwide decline in 2012, dipping 35 percent to $114.1 billion in 2012 from $175.7 billion in 2011.

Ernst & Young’s report notes nearly the entirety of the decline stemmed from deals exceeding $1 billion, with only two of those 2012 deals large enough to break into the top 10 of billion-plus deals from 2011.

Joe Steger, global technology industry, transaction advisory services leader at Ernst & Young, pointed toward the macroeconomic downturn from the end of 2011 as a key factor in slowing down M&A in 2012.

“But, that pressure also helped clarify what’s important. We saw growth in the strength of transformative megatrends — social-mobile-cloud, big data analytics and accelerated adaptation — while the really big-ticket deals pulled back,” said Steger.

Nearly 15 percent of global tech M&A transactions in 2012 could be attributed to the cloud computing and Software-as-a-Service (SaaS) sector and another 12 percent sparked from non-tech entities acquiring tech companies. In addition, big data analytics, smart mobility, security, health care IT and mobile payments all moved more deals forward in 2012 than in 2011.

Ernst & Young also noted that the Americas set the bar for total value of M&A in regards to social mobile cloud and big data analytics in 2012, accounting for 92 percent of the total volume.

Steger didn’t expect much overall volume change for tech M&A in 2013 and reminds us that large looming deals like T-Mobile, MetroPCS and Sprint, Softbank won’t factor in since they fall under telecoms and not tech.

“We expect the first quarter of 2013 will be seasonally down. Overall, we expect a relatively stable volume of strategic deals in 2013 as compared with 2012, but with growth weighted more toward the second half of the year,” said Steger.

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