By Rob Starr, Big4.com Content Manager
It’s good when records are being set, when reports are using terms like “blockbuster” to describe technology M&A and comparisons to other high-water marks are quick to point out recent trends are set on reality-based multiples of good old-fashioned revenue and not bubbles. EY’s Global technology M&A update: October-December 2014 was full of that kind of good news even when it was reported corporate technology dealmakers backed away from big-ticket deals in 4Q14 as one of the only drags on the forward momentum.
Jeff Liu, Global Technology Industry Transaction Advisory Services Leader at EY, recently guided us through the picture the research paints and he started with some broad swaths to supply some background.
“I would say that having been in the industry for about 25 years, this is by all measures probably the most historical transformational time that we’ve seen, both from the standpoint of the actual technology as well as the impact of the technology as an enabler.”
There’s ample evidence the forces behind global technology M&A are fully aware of Liu’s claim and are determined to take advantage. For example, at 959 deals, 4Q14 volume set a fourth consecutive post-dotcom-bubble quarterly record.
There are several reasons for this boom, according to Liu, including the emergence of cloud computing, the proliferation of smart mobile devices and the ability to exploit big data all working in a three-pronged transformative approach.
“The impact is really about these factors that have disrupted what has been the primary technology paradigm for the last few decades, which is client-server on-premise based networks where there was a physical tether,” he said. Liu adds that a new rising middle class, broadband and the changes in user behavior that have “turbo charged” social media have also played a central role in driving M&A activity.
In an industry that’s in a constant state of flux, there are a few constants and one is the never-ending efforts and attempts at corralling, understanding and acting upon the lessons learned from big data. Liu sees two recent advances changing the nature of this IT foundation.
“The ability to capture it and store it effectively is one which is important from both the cost and technology standpoints,” he says. “The other half is analytics, which is the ability to derive insights in an aggregate from massive amounts of data.”
He finishes with an example providing an idea of the scope big data is capable of.
“If you digitized and stored all the music in the world since its creation, it would fit on three or four terabits of storage. A Boeing aircraft engine throws that out routinely in a single trans-Atlantic flight. Big data has brought us the ability to capture and store that much data and then analyze it to help with things like maintenance expense reduction or safety.”