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BLOG: While tech M&A slipped at 2011's end, don't despair; better 2012 Is here

Roy Harris | Feb. 17, 2012
A dramatically slower 2011 fourth quarter for technology mergers and acquisitions shouldn't discourage corporate finance chiefs, because buyer activity this year actually could be boosted by the dampened expectations.

The accountancy detected "the clear imprint of five technology megatrends" in the deals announced. They were "smart mobility, cloud computing, social networking, 'big data' analytics and cross-sector and cross-industry blur -- plus the increased information security needs that come with them all." It identified smaller trends reflecting "the irresistible force of disruptive innovation, which is remaking the technology industry while enabling transformative change in other industries as well."

Steger said in his comments accompanying the report that the disruptive megatrends "have helped fuel a significant rise in global technology M&A activity since 2009, despite a slight pullback due to macroeconomic pressures in late 2011." The suggestion that M&A transactions "will likely take a pause in the first quarter of 2012," though, shouldn't affect a healthy long-term outlook to reflect the disrupting technology innovation.

Welcome Back, Private Equity

E&Y recounted the strong record for billion-dollar-plus tech deals, of which it counted 34 in 2011, including eight in the fourth quarter. "Established companies made major consolidation plays and placed big bets on smart mobility (including internet and mobile video), cloud computing and business intelligence/analytics," it said. "At the same time, a multitude of smaller deals demonstrated the strategic importance of certain technologies, especially social networking and security, but also healthcare information technology, online and mobile games and advertising/marketing technologies. There were 100-150 deals in each of these areas in 2011, including many deals that overlapped several of them."

Five of the top M&A transactions, worth a total of $21.2 billion, reflected semiconductor consolidation. And restructuring deals were announced in other sectors, including the communications equipment and computers, peripherals and electronics sectors.

It called the return of private equity deals among "the big stories of 2011." Totals were lower than what was recorded before the global financial crisis, but PE volume increased every quarter during the year, to a total 2011 total of 317 deals, 19% more than in 2010, and a PE deal value of $33 billion that was 67% above the $19.7 billion recorded in 2010.


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