The first half of 2017 brought 441 deals worth US$41.3 billion targeting US technology firms. Compared with H1 2016 activity, value in tech-sector M&A is down 40.2 percent from US$69.1 billion, and volume is down from 463.
The drop in headline figures, however, does not reflect how technology has become one of the most important drivers of M&A across all sectors. Of the ten largest technology deals in H1 2017, only four are traditional tech M&A transactions between two industry incumbents. The other six transactions involve at least one party from a non-tech industry.
Online retailer Amazon, for example, has shaken up the consumer sector with its purchase of brick-and-mortar grocer Whole Foods for US$13.5 billion, breaking down preconceptions of where the distinctions between physical retail and technology lie. Driverless car technology, meanwhile, has opened the door for pure technology companies to compete against established automotive manufacturers, as demonstrated by Intel Corporation’s US$15 billion acquisition of Israeli driver assistance system developer Mobileye.
"The conversation has expanded beyond just pure tech," says White & Case partner Arlene Hahn. "As more devices become smart, products become connected, and more processes become automated, non-tech companies will need to invest in tech not to disrupt an industry, but just to remain competitive."
The H1-B lottery
But although cross-sector convergence means the tech industry is positioned to continue generating strong dealflow, there are major concerns about the consequences for the industry if the Trump administration clamps down on immigration into the US.
The H1-B visa program, which allows companies to bring into the US a fixed number of workers in specialty occupations each year, has been an important source of talent for technology companies. Many are worried this flow of human capital may soon be cut off.