By Rob Starr, Big4.com Content Manager
The third quarter 2014 issue of PwC’s Global Technology IPO Review highlighted some interesting trends with China and Chinese exchanges making a strong showing and eighteen technology companies from six different countries completing their IPOs.
“It’s a pretty exciting period for the industry. There’s a lot going on with the underlying technologies and the ways they’re being used by consumers, businesses and governments,”
says Rob Fisher, PwC’s US Technology Deals Leader. “That’s what is really fundamentally transforming the industry on both sides and driving a lot of M&A, divestiture and spend type announcements.”
Fisher explained how the impressive numbers translate into changing landmarks on the technology landscape.
“It all seems to be leading to a transformation within the industry from the tech titans of the last decade to a shift in the business model,” he says going on to say the shift is moving from a foundation that was PC based, on premises with capital equipment for enterprises to an industry that’s being delivered through the cloud, social and mobile.
“That’s a technology shift to some extent, but it’s also a pretty significant business model shift especially on the enterprise side,” Fisher said. “It’s pretty interesting because the activity that we’re seeing in terms of M&A reflects companies acquiring into these new technologies to some extent and trying to extend their ecosystems.”
Internet Software & Services had six IPOs and raised US$22.8bn in Q3’14 compared to 20 IPOs and US$5.1bn in proceeds in Q2’14 and six IPOs with US$0.6bn in Q3’13.
Fisher also points to how the decade long trend whereby consolidation played a major role in driving the cost down for the IT equation is now giving way to a recent trend by which industry leaders are starting to separate and deconsolidate to drive growth in what he calls “more specific narrow focused areas.”
One of the other noteworthy aspects of the companies that are going public is the fact they are being richly valued.
“This is particularly true in relation to the incumbent technology companies and that’s making them very difficult for the incumbents to acquire,” Fisher points out. “I think that’s another thing that’s fuelling this divestiture, spin-off, break-up wave.”
“It’s become so expensive for some of these companies to cover all of the emerging threats in cloud, they’re looking at getting into smaller pieces to cover those areas of their portfolios they think are the most important,” he says.