Global technology M&A update: 2009 highlights
The fourth quarter of 2009 was the best of times in more than a year for global technology M&A — and it may herald an end to the worst of times in more than a decade. But is it sustainable? While M&A transactions are likely to continue over the next few quarters, the question remains: are today’s levels of activity indicative of a new normal or is this the beginning of a new growth curve?
Total number of announced deals, 4Q09
Total number of announced deals, 2007 through 2009
Note: All deal values quoted in this report are corporate and PE combined, unless otherwise noted and are based on deals with disclosed values included in FactSet Mergerstat data, last accessed 7 January 2010.
Technology M&A themes emerging:
- Acceleration: Global technology M&A has had three quarters of accelerating activity growth (in low double digits, 9%, 11% and 13%) in number of deals.
- Convergence: The industry continues to consolidate across sectors, driven by leading companies’ desire to integrate previously diverse capabilities into one-stop shops that can gain a larger share of customers’ (enterprise IT and consumer) spend.
- Mobility: Industry M&A activity reflects the demand for mobile infrastructure “ecosystems” as smartphones and other mobile devices proliferate.
- Innovation: Industry M&A activity reflects a growing role for technology-enabled innovation in transforming other industries, especially energy and health care, which are at the top of global societal agendas.
- Excellence: Industry M&A activity reflects a growing trend for companies with excellent execution to gain strength and diversify — the strong get stronger and the weak get acquired, divested or disappear.
- Valuation: Average corporate deal size is getting bigger, returning to levels prior to the global recession although the smaller number of deals may skew this; the size of PE deals getting done fluctuates, but is generally smaller than before the global recession.
Regardless of whether the pace of overall M&A growth continues, each deal opportunity is unique. A good approach is to measure each transaction opportunity against your own company’s strategy — for growth, to meet your customer’s needs or to gain access to leading technology markets.
