Search for growth in social, mobile fuels tech M&A boom

Technology mergers and acquisitions reach post-dotcom records, and are expected to rise

The search for game-changing technology capable of fueling growth in an uncertain economy is driving global tech mergers and acquisitions to a level not seen since the dotcom era.

What's more, tech M&A is likely to increase, according to data from EA, the global professional services company formerly known as Ernst & Young.

Tech M&A centered around online and mobile payments, social networking, gaming and e-commerce in the last quarter, according to a report out Thursday from EA. Much of the activity appears to be driven by a desire to acquire disruptive technology.

Historically, tech M&A was driven by major vendors like Hewlett-Packard, Oracle and IBM trying to expand their reach by acquiring companies to consolidate and build on established tech product families, said Jeff Liu, Global Technology Industry Transaction Advisory Services leader at EY.

"Now it's disruptive technology that's in the crosshairs," Liu said. "Consolidation involves coporations needing to catch up in a way that they are not able to do fast enough orignaically."

The aggregate global value of all publicly disclosed-value deals set a new post-dotcom era quarterly high of US$73.7 billion [b], up 41 percent sequentially and 4 percent year over year. At 923 deals in total, overall volume also set a record for any quarter since 2000, rising 6 percent sequentially and 31 percent year over year.

Corporations, as opposed to private equity deals, continue to drive the growth, increasing aggregate value 40 percent sequentially and 9 percent year over year to $65.3 billion.

In EA global surveys of its clients, about 80 percent of respondents expected some sort of M&A to take place over the next four quarters, an all-time high for such polls, Liu said. This should translate into the current level of tech M&A rising by 25 percent, he said.

EA says there are five "megatrends" driving tech M&A: smart mobility, cloud computing, social networking, big data analytics and what it calls accelerated technology adaptation, defined as technology companies rapidly adapting to the needs of specific industries and other industries rapidly adapting to the evolving possibilities that technology enables.

Some of the biggest recent deals highlight these trends. For example, SAP in September said it it would buy business-travel and expense software vendor Concur for about US$8.3 billion, in a bid to continue growing out its portfolio of cloud-based applications. It was the largest deal of the quarter.

And in a $3.5 bilion deal announced in July, Zillow, the online service that brought big change to how properties are bought and sold, is buying Trulia, a site that has also disrupted the real estate market.

Though there is still uncertainty about the economy globally, EY's biannual Technology sector Capital Confidence Barometer (CCB), released alongside the M&A report, also points to a strong technology M&A outlook. Ninety-six percent of the 163 technology executives surveyed expressed confidence that the global economy is stable or improving. Eighty-three percent of technology respondents expressed confidence in their own corporate earnings.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments

Blog Posts

Taking performance cues from east Asian markets

As the ‘Asian century’ becomes ever more prevalent and the Fourth Industrial Revolution gathers speed, marketers are having to surf a tidal wave of creative destruction. The choice is stark: Embrace change, or resign yourself to a Darwinian fate.

Dr Chris Baumann

Associate professor, Macquarie University

Searching for social and marketing data

Many marketers, agencies - and everyone in between - get caught up on bubble references and data points. They’ll use Facebook best practice as the only best practice for Facebook executions and only consider metrics and responses of the one channel they’re expected to deliver on.

Isaac Lai

Connections strategy lead, VMLY&R Sydney

Why Australia needs more leaders

A few weeks ago, our Prime Minister, Scott Morrison took it upon himself to tell companies and their CEOs where to go when it came to societal issues. It wasn’t an organisation’s place to get involved. Instead, he said it should be left to governments to solve societies challenges.

Dan Banyard

Managing director, Edentify

Congratulations! So good to see a business turnaround with a good omni channel email lead strategy.Antanthonyidle.com

Anthony Idle

How Total Tools overhauled its omnichannel marketing

Read more

Well, you can always improve your service. Your customers will appreciate your efforts.

Mike Thompson

Report: Australian customer experience good but not great

Read more

Thanks for sharing! Terracotta Jewellery Online Shopping Ethnic Jewellery Online Shopping

Cotton Sarees Online

How data is driving the customers of a lifetime for BaubleBar

Read more

Informative blog. Xero is a well-known revolutionized accounting software, specifically developed to provide best User Experience and mak...

NavkarConsultancyServices

Xero evolves to fit a changing marketplace

Read more

>Writes article about how to show diversity in an authentic way>All featured opinions are from white women

Jennifer Metcalfe

Food for Thought: How can brands show diversity in an authentic way?

Read more

Latest Podcast

More podcasts

Sign in