In recent years past, global technology M&A experienced slow first quarters. But not this year – the first quarter of 2015 set new post-dotcom-bubble records for quarterly value and volume according to EY’s report on Global technology M&A. Overall, there were 981 technology deals with an aggregate value of US $77.1 billion – a higher value than any quarter since Y2K.
The driving force behind the technology M&A boom
A main contributor to the “Year of Technology M&A” is the fact that corporate technology buyers are back in business after taking break during the fourth quarter of 2014. This contributed to 15 deals above the $1 billion mark.
There was also significant cross-border activity. Cross-border technology deals had a $32.2 billion aggregate value, with seven deals over $1 billion and one deal over $10 billion. US and Europe were net sellers, while Japan and Canada were net buyers.
Unexpectedly, non-technology buyers were also major players in the first quarter of 2015. Non-technology buyers are typically slow to the game at the beginning of the year, but this year they contributed $19.5 billion in the first quarter, a six-fold increase compared to the first quarter of 2014. This is a clear sign that firms other than corporate technology buyers are recognizing the advantages of technology transformation and the need to add cybersecurity to a wide range of products and services. Non-technology firms are expected to maintain this activity throughout 2015.
Industries to watch
Health care IT was the main driver for the first quarter of 2015 due to a single deal worth more than $10 billion. The internet of things (IoT) was also a significant driver. This is not surprising given that IoT adds network-enabled digital sensors to everyday products, which is a high-valued technology in any industry.
Other industries which experienced a growth in the first quarter of 2015 were security, big data, payment and financial technologies, smart mobility and cloud/SaaS.
The “Year of Technology M&A” presents multiple opportunities for buyers and sellers alike. Technology firms looking to sell may wish to develop new technologies with digital sensors, processing, connectivity and security to increase the value of target value. Buyers can use this trend to push for more comprehensive technology solutions. Overall, we can expect to see continued growth in global technology M&A throughout 2015 and beyond.
The author would like to thank Chelsea Nimmo, articling student, for her assistance in preparing this legal update.