Digital investment boosts technology M&A deals

US dollar
The growth of the Internet of Things (IoT) and big data analytics, two disruptive technologies, was a major factor shaping M&A deals — worth nearly $127 billion — in technology segment in Q2 2016, according to EY estimates.

The number of deals driven by these digital technologies increased at a faster pace than all others for both Q2 2016 and YTD (year-to-date). IoT volume rose 28 percent YOY for Q2 2016 and 26 percent YTD; big data analytics volume grew 13 percent for the quarter and 29 percent YTD.

“Digital technology is becoming like electricity, water and oxygen for companies in every sector; they can’t survive without it. Expect global technology M&A to match or surpass last year’s record pace by the end of the third quarter,” said Jeff Liu, EY Global Technology Industry Leader, Transaction Advisory Services.

The number of big technology M&A deals (worth above $1 billion) was 28. According to the EY Global technology M&A report — April-June 2016 final look, the previous record of 20 big-ticket deals was set in Q4 2015.

The combination of digital disruption and slow organic growth drove Q2 2016 for the technology sector overall. Aggregate value for the quarter was $127.2 billion (+91 percent) in Q2 2016, ranking this quarter as the third-highest technology M&A quarter ever by value.

So far this year, the global technology sector has seen 2,041 deals, 2 percent ahead of 2015’s post-dotcom-record pace.

Corporate tech buyers announced only one megadeal (above $10 billion) in Q2 2016, compared with three in Q2 2015.

The total size of the disclosed-value technology deals by PE buyers made Q2 2016 was $25.7 billion.

The total value of technology deals from companies outside of the sector buying technology companies rose 95 percent to $21.3 billion. Volume from non-tech buyers increased 28 percent to 159 deals.

Chinese buyers recorded their highest-value technology quarter ever with $32.3 billion in disclosed-value deals. It brought their year to date total to $47.4 billion, which is already 19 percent ahead of their entire 2015 value of $39.9 billion.