The fourth quarter of 2015 concluded a year of multiple global technology dealmaking records, setting a new all-time high for annual tech M&A aggregate value, thereby surpassing the previously set record in 2000, according to research conducted by Ernst & Young (EY).
EY said the fourth quarter of 2015 ended a blockbuster year with a “megahit” quarter, as the valuation of disclosed deals grew by 323% compared to the same period in 2014. EY expects the forces behind the last quarter’s deal value to continue in 2016 as massive digital transformation caused by disruptive cloud, mobile, social and big data analytics technologies is still in its infancy.
“Consequently, many tech vendors will continue addressing the growing need for high-performance cloud data centres to handle the data storage and processing load those digital transformation trends require. This will lead some companies to continue seeking scale and end-to-end solutions, while others will still privately manage their own transformation away from public-market scrutiny,” the global advisory firm noted.
Global technology M&A values and volumes will remain high but moderate in 2016. As digital technology transforms other industries, more complex ecosystems are evolving to deliver complete solutions. A powerful new partnering form called ‘industrial mash-ups’ will increasingly stand in for M&A in such situations.
However, despite the multiple value records, the quarterly volume of 932 deals declined 3% year-on-year and 13% sequentially, ending a string of nine consecutive quarterly increases and seven consecutive post-dotcom-bubble volume records. At 3,996 deals, annual volume increased 14% from 2014. Deals targeting the Internet of things (IoT) technologies rose, even as the volume of other deal-driving trends fell. From a value perspective, cloud/software as a service (SaaS); mobility; security; payments and financial technologies; advertising and marketing; gaming; and online video all finished strong in 4Q 2015.
Cross-industry blur increased again, as non-tech buyer volume rose despite the overall volume (year-on-year and sequential) decline. Cross-border aggregate deal value rose to $27.5 billion, up 14% more than the US$24.1b in 3Q 2015 – but was only 14% of total 4Q 2015 value.
Here are some of the other records broken in 2015:
- In the US, targeted M&A volume reached a new record high (up 59% year-on-year), while Asia Pacific targeted M&A broke the $1 trillion mark, a record high.
- By sector, healthcare M&A was up 66% from the prior year, hitting a new full-year record of $724.4 billion. Tech M&A hit a record high in terms of volume and activity.
- There was also record spin-off volume and near-record highs on global cross-border M&A.
- Goldman Sachs, Morgan Stanley, JPMorgan, and Bank of America Merrill Lynch all reached record highs in terms of annual advisory volumes.
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