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EY’s Q1 technology M&A report shows the more things change, the less they stay the same

By Rob Starr, Content Manager       

As soon as Jeff Liu, Global Sector Head, Technology – Transaction Advisory Services for EY, starts talking about the results and trends from his firm’s Q1 technology M&A report, old axioms like  the famous one from Alphonse Karr start falling away at the hands of new catchphrases like disruptive technologies.

First, he offers a perspective for findings like the internet of things (IoT) tripling in aggregate

Jeffrey Liu

Jeffrey Liu

value over 4Q14 and values for security, big data, payment and financial technologies, smart mobility and cloud/SaaS also rising over the previous quarter.

“The disruptive trends that we’re seeing in technology today are historic and tech has gone through a few different cycles of innovation,” he said, “whether it’s back to the semiconductor and chip, from things like the architectural shift from mainframe to client server and the birth of the Internet. The things that we’re seeing now because of things like cloud computing and the mobile device environment are combining with other things like the global macro economy.”

Liu includes the rise of the middle class in countries like India and China with the other drivers that have fuelled the predominance of disruptive technologies as they play through various industrial sectors and verticals. He’s quick to stress the magnitude of the current shift that has seen the 1Q15 aggregate value of disclosed-value deals hit $77.1 billion, higher than any quarter since 2000. That’s up 16% year-over-year (YOY) and 72% sequentially.

“This is going to be very persistent and very long lasting in impact,” he says mentioning some of the findings for the particular areas already noted were encouraging for the larger global economy as the blurring between tech and non-tech companies accelerates.

“This really is all about productivity gains and really benefits the users whether they’re consumers or business people in the enterprise.”

Good Tidings

The volumes of deals in the tech M&A sector reflects these good tidings having reached historic levels consecutively, finally arriving at a point unseen since the late nineteen nineties, according to Liu. Drawing a line from those earlier years where essential ingredients like broadband internet were developing and accessibility was limited, Liu also says there are some real implications for today’s technology industry that’s clearly come of age.

“If you actually peel back the onion in terms of M&A activity, the results are twofold. One aspect is innovation driven acquisitions that are meant for growth,” he said. “On the flip side, there is the aspect of transactions whereby more mature parts of the industry are not able to keep pace.”

He calls this the downside of what is otherwise the juggernaut of digital disruption with activist driven sales, carve ups and breakups being the fate of some less fortunate tech companies as well.













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