Click here to close now.

Welcome!

SAP HANA Cloud Authors: Sematext Blog, Liz McMillan, Pat Romanski, Carmen Gonzalez, Plutora Blog

News Feed Item

Global technology M&A value declines 35% in 2012 but only 4% in fourth quarter

- Fewer large, transformative deals compared with 2011

NEW YORK, Feb. 13, 2013 /PRNewswire/ -- The aggregate value of technology mergers and acquisitions (M&A) declined 35% worldwide in 2012, to US$114.1b from US$175.7b in 2011, according to Ernst & Young's Global technology M&A update: October-December 2012 and year in review report [hyperlink to the report]. Deal value in 4Q2012 was US$29.4b, down 4% year over year (YOY) from US$30.5b in 4Q 2011.

Nearly the entire full-year decline came from deals above US$1b in value. For example, the largest deal of 2012 would have placed fifth in 2011 and only two 2012 deals would have made it onto the 2011 top 10 list. Companies were hesitant to engage in large, transformative, technology deals because the uncertain macroeconomic environment increased many risks, particularly the risk of an incorrect valuation as equities markets fluctuate and buyers believe many company values remain high.

Deal volume held steady, however, as companies continued to engage in smaller, more strategic deals driven by technology megatrends that are generating transformative innovation in technology and leading to technology-enabled innovation in other industries. These megatrends include smart mobility, cloud computing, social networking, big data analytics and accelerated adaptation, as technology companies rapidly adapt to the needs of specific industries and other industries rapidly adapt to the evolving possibilities that technology enables.

Both corporate and private equity (PE) deal-making declined. The aggregate disclosed value of PE deals declined by nearly half (down 47%), to US$18.5b in 2012 from US$34.8b in 2011. Aggregate value of corporate deals declined 32% to US$95.6b in 2012 from US$140.9b in 2011. The average value of deals that had disclosed values was US$188m, down 14% from US$218m in 2011.

Joe Steger, Global Technology Industry, Transaction Advisory Services Leader, at Ernst & Young, says:

"The macroeconomic pressures that returned in late 2011 held down global technology M&A activity in 2012. But, that pressure also helped clarify what's important. We saw growth in the strength of transformative megatrends — social-mobile-cloud, big data analytics and accelerated adaptation — while the really big-ticket deals pulled back. Heading into early 2013, the short-term outlook suggests a soft couple of quarters but the long-term outlook for technology M&A remains strong, as both technology and non-technology industries have an ongoing need to adapt to disruptive technology innovation."

Deal drivers:

  • Cloud computing/Software-as-a-Service (SaaS) deals dominate M&A landscape: Largely on the strength of SaaS growth, the cloud/SaaS megatrend "ran away" from the rest of the pack of deal-driving trends in 2012, growing to more than 15% of global technology M&A deal volume. Cloud/SaaS deals ranged from supply chain management, marketing and retail SaaS to cloud-oriented networking gear. Big data analytics deal volume saw similar growth, but from a smaller base.
  • Non-technology companies buying technology outpaces other deal types: To help accelerate their adaptation to the innovation that technology is enabling in many industries, non-technology buyers increased technology-buying activity all year, ending with 10% of full-year aggregate value and 12% of volume.
  • Megatrends drive increasing share of deals: In addition to cloud/SaaS and big data analytics, smart mobility, social networking, advertising and marketing, security, mobile/e-payments and health care information technologies (HIT) all drove a larger number of deals in 2012 than in 2011, even as overall deal-making held steady. Thus, their footprint in the global technology M&A landscape increased.

Cross-border deals decline for first time in three years

Cross-border deal volume declined for the first time in three years, to 970 deals in 2012 from 999 deals in 2011 (-3%). The full-year 2012 value of cross-border deals fell 32% to US$47b from US$68.9b in 2011. Because that decline was less than the overall 35% drop, cross-border aggregate value rose to 41% of overall aggregate value from 39% in 2011. But cross-border deal-making followed the same pattern we saw in 2011 – it climbed in the first half of the year and fell in the second half. In 4Q4 2012, cross-border value fell to US$8b, or 27% of quarterly aggregate value.

Regional snapshot

The Americas continued as the major trendsetter in social-mobile-cloud and big data analytics deals in 2012, acquiring 92% of full year global volume and disclosed value. In Asia-Pacific and Japan, online and mobile video and video games were the significant value drivers for technology M&A during 2012. In Europe, the Middle East and Africa (EMEA), cloud/SaaS, smart mobility and social networking megatrends propelled much of the M&A buying in 2012.

Looking ahead: mixed signals for technology M&A with possible recovery in late 2013

In 4Q12, technology M&A data gave mixed signals, suggesting that the market might be approaching a near-term bottom. However, the report noted 22% YOY growth in mid-priced deals (between US$100m and US$1b) in 4Q12, which suggests that the broad-based need for transactions that help companies accelerate their adaptation to transformative technology innovation has not changed. What has changed is that macroeconomic uncertainty increased throughout 2012 at the same time that many valuations increased. This was demonstrated by the 16% increase in the NASDAQ, driving up the valuation risk inherent in large transformative deals.

"We expect the first quarter of 2013 will be seasonally down. Overall, we expect a relatively stable volume of strategic deals in 2013 as compared with 2012, but with growth weighted more toward the second half of the year," concludes Steger.

Notes to editors

About our M&A update report
Global technology M&A update: October-December 2012 and year in review is based on Ernst & Young's analysis of The 451 Group M&A Knowledgebase data for 2011 and 2012. Deal activity and valuations may fluctuate slightly based on the date that the database is accessed. The full report is available at www.ey.com.

Ernst & Young's Global Technology Center
The technology industry is in a constant state of change — driven by continuous innovation, shifting markets, converging industries, consumer demand and the need for first-mover advantage. Ernst & Young's Global Technology Center connects a worldwide team of more than 15,000 technology professionals to help you navigate the challenges of this continuous change. We provide assurance and tax guidance through a network of experienced advisors to help you manage risk, transform business performance and sustain improvement. We can help you deliver cost-effective innovation, balance product portfolios, maintain effective supply chains, and identify, execute and integrate strategic growth transactions. Our global technology network leverages our leading market share position in serving technology companies to provide you with timely, reliable information. Our teams use a cross-discipline, collaborative approach to help you achieve your business objectives. We encourage our people to use their ingenuity and initiative to help you develop approaches, create options and seize opportunities. It's how Ernst & Young makes a difference.

About Ernst & Young
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.

This news release has been issued by EYGM Limited, a member of the global Ernst & Young organization that also does not provide any services to clients.

SOURCE Ernst & Young

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
There will be 150 billion connected devices by 2020. New digital businesses have already disrupted value chains across every industry. APIs are at the center of the digital business. You need to understand what assets you have that can be exposed digitally, what their digital value chain is, and how to create an effective business model around that value chain to compete in this economy. No enterprise can be complacent and not engage in the digital economy. Learn how to be the disruptor and not the disruptee.
2015 predictions circa 1970: houses anticipate our needs and adapt, city infrastructure is citizen and situation aware, office buildings identify and preprocess you. Today smart buildings have no such collective conscience, no shared set of fundamental services to identify, predict and synchronize around us. LiveSpace and M2Mi are changing that. LiveSpace Smart Environment devices deliver over the M2Mi IoT Platform real time presence, awareness and intent analytics as a service to local connected devices. In her session at @ThingsExpo, Sarah Cooper, VP Business of Development at M2Mi, will d...
Thanks to widespread Internet adoption and more than 10 billion connected devices around the world, companies became more excited than ever about the Internet of Things in 2014. Add in the hype around Google Glass and the Nest Thermostat, and nearly every business, including those from traditionally low-tech industries, wanted in. But despite the buzz, some very real business questions emerged – mainly, not if a device can be connected, or even when, but why? Why does connecting to the cloud create greater value for the user? Why do connected features improve the overall experience? And why do...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
Imagine a world where targeting, attribution, and analytics are just as intrinsic to the physical world as they currently are to display advertising. Advances in technologies and changes in consumer behavior have opened the door to a whole new category of personalized marketing experience based on direct interactions with products. The products themselves now have a voice. What will they say? Who will control it? And what does it take for brands to win in this new world? In his session at @ThingsExpo, Zack Bennett, Vice President of Customer Success at EVRYTHNG, will answer these questions a...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal an...
SYS-CON Events announced today that BMC will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BMC delivers software solutions that help IT transform digital enterprises for the ultimate competitive business advantage. BMC has worked with thousands of leading companies to create and deliver powerful IT management services. From mainframe to cloud to mobile, BMC pairs high-speed digital innovation with robust IT industrialization – allowing customers to provide amazing user experiences with optimized IT per...
We’re entering a new era of computing technology that many are calling the Internet of Things (IoT). Machine to machine, machine to infrastructure, machine to environment, the Internet of Everything, the Internet of Intelligent Things, intelligent systems – call it what you want, but it’s happening, and its potential is huge. IoT is comprised of smart machines interacting and communicating with other machines, objects, environments and infrastructures. As a result, huge volumes of data are being generated, and that data is being processed into useful actions that can “command and control” thi...
Building low-cost wearable devices can enhance the quality of our lives. In his session at Internet of @ThingsExpo, Sai Yamanoor, Embedded Software Engineer at Altschool, provided an example of putting together a small keychain within a $50 budget that educates the user about the air quality in their surroundings. He also provided examples such as building a wearable device that provides transit or recreational information. He then reviewed the resources available to build wearable devices at home including open source hardware, the raw materials required and the options available to power s...
In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect at GE, and Ibrahim Gokcen, who leads GE's advanced IoT analytics, focused on the Internet of Things / Industrial Internet and how to make it operational for business end-users. Learn about the challenges posed by machine and sensor data and how to marry it with enterprise data. They also discussed the tips and tricks to provide the Industrial Internet as an end-user consumable service using Big Data Analytics and Industrial Cloud.
We certainly live in interesting technological times. And no more interesting than the current competing IoT standards for connectivity. Various standards bodies, approaches, and ecosystems are vying for mindshare and positioning for a competitive edge. It is clear that when the dust settles, we will have new protocols, evolved protocols, that will change the way we interact with devices and infrastructure. We will also have evolved web protocols, like HTTP/2, that will be changing the very core of our infrastructures. At the same time, we have old approaches made new again like micro-services...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happens, where data lives and where the interface lies. For instance, it's a mix of architectural styles ...
Connected devices and the Internet of Things are getting significant momentum in 2014. In his session at Internet of @ThingsExpo, Jim Hunter, Chief Scientist & Technology Evangelist at Greenwave Systems, examined three key elements that together will drive mass adoption of the IoT before the end of 2015. The first element is the recent advent of robust open source protocols (like AllJoyn and WebRTC) that facilitate M2M communication. The second is broad availability of flexible, cost-effective storage designed to handle the massive surge in back-end data in a world where timely analytics is e...
Collecting data in the field and configuring multitudes of unique devices is a time-consuming, labor-intensive process that can stretch IT resources. Horan & Bird [H&B], Australia’s fifth-largest Solar Panel Installer, wanted to automate sensor data collection and monitoring from its solar panels and integrate the data with its business and marketing systems. After data was collected and structured, two major areas needed to be addressed: improving developer workflows and extending access to a business application to multiple users (multi-tenancy). Docker, a container technology, was used to ...
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impact.
The Industrial Internet revolution is now underway, enabled by connected machines and billions of devices that communicate and collaborate. The massive amounts of Big Data requiring real-time analysis is flooding legacy IT systems and giving way to cloud environments that can handle the unpredictable workloads. Yet many barriers remain until we can fully realize the opportunities and benefits from the convergence of machines and devices with Big Data and the cloud, including interoperability, data security and privacy.
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In this session, James Kirkland, Red Hat's Chief Architect for the Internet of Things and Intelligent Systems, will describe how to revolutionize your architecture and...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example t...
All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo, June 9-11, 2015, at the Javits Center in New York City. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.