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Ernst & Young: Global technology M&A value falls 52% YOY

By Rob Starr, Content Manager, Big4.com

According to Ernst & Young’s Global technology M&A update: July–September 2012 report, the aggregate value of technology mergers & acquisitions (M&A) fell 52% year-on-year (YOY) and 15% compared with the previous quarter to US$28.2b in the third quarter of 2012.

Large M&A transactions gave way to smaller, more strategic deals, as companies proceeded cautiously in light of continued, widespread macroeconomic uncertainty. In particular, the total volume of announced deals in 3Q12 was 752, up 2% YOY and 3% sequentially (on 2Q12). Strategic transactions continue to be driven by five long-term megatrends that are generating disruptive innovation in technology and leading to technology-enabled innovation in other industries.

Sub-trends are gaining traction as data center performance, mobile/e-payments and HIT, along with the five megatrends, continued to drive strategic deals in 3Q12. For example, deals related to the rapid evolution of data center technology — necessary to meet the demands of cloud computing, smart mobility and big data analytics — surged ahead, in spite of broader macroeconomic challenges. And while the value of social networking and patent deals declined from 2Q12, buyers continued to target technologies that add social functions to enterprise software and intellectual property (IP) associated with the five megatrends.

Americas’ deal-makers captured a sequentially smaller share of global deal volume for the second consecutive quarter but a significantly larger share of global value. Key 3Q12 deal drivers included cloud/SaaS, smart mobility, social networking and big data, as well as health care and payments technologies — and nearly US$1b in disclosed-value distributor deals. In aggregate, the US captured 9 of the top 10 global technology deals (based on disclosed value) of the quarter – the tenth went to Brazil.

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