PwC has just released their Technology M&A Insights report. It is, as they say, a ‘jolly good read’ particularly for people who like lots of data and charts to go with the more subjective comments.
Despite (or because of?) the economic environment, global M&A deals really stood up rather well in 2011. PwC reported a fairly minor 10% decline in volumes of deals (to 354) and a 9% reduction in total value (to $69b). But these are still around half the volume and value of deals done in 2007 – the year before the storm. Or if you are a ‘glass half full’ type, deal value in 2011 was 90% higher than in 2009.
It’s interesting that (as can be seen in the chart below) deals pe
aked in Q4. Three of the world’s largest deals – including HP’s $10b deal for Autonomy – happened then.
As PwC say ‘Cash is King’. It is still hard to raise cash for these kind of deals. But many tech companies are sitting on big cash piles and are obviously looking at this as a good time to put it to some use.
So what are the trends PwC see?
Strategic acquisitions are the rule. It sounds obvious but was often not the case. Buying for bulk was a trend once. Now, it’s all about getting to market quicker than you could do if you built it yourself. HP/Autonomy is one of many examples here.
Buying Intellectual Property is ‘a clear trend…with patent acquisition being the driver behind a number of deals”. Google’s acquisition of Motorola’s handset business is a good example.
Cyber Security is a hot topic. Again BYOT just accentuates the need. Intel’s acquisition of McAfee for $7.8b, BAE Systems buying both Norkom (€189m) and ETI (€161m) were examples here.
The Financial Technology Sector was also buoyant – spurred on by ‘a wave of structural and regulatory changes”. Eg Misys buying Sophis (€435m), Vista Equity buying Thomson Reuter’s risk management unit – Kondor, Carlyle buying ITRS are examples here. Mobile payments were also highlighted with Verifone Systems acquisition of Point (€600m) as an example.
Big Data is a term which crops up at every briefing session we hold. Products and services that can ‘turn these raw data sets into valuable commercial information” are much in demand. Of course, many people put Autonomy in that bag. SDL and Alterian is another, albeit smaller (£68m), UK deal in that space.
Smartphones were singled out by PwC as underpinning M&A activity in applications and components. Eg HTC’s acquisition of UK mobile video specialist Saffron Digital for £30m. Of course, the UK is home to a large number of high quality chip design companies – ARM, Wolfson, CSR, Imagination Technologies. Be interesting to see which of these figures in the M&A charts in 2012.
The Global M&A Top Ten was headed by HP and Autonomy. Indeed that was the only UK deal in that part of the list.
Of course, Autonomy headed the UK list too. Other Top UK deals of note were:
- Serco acquiring Intelenet Global Services (India) €447m
- Misys acquiring Sophis (Ireland) €435m
- Reed Elsevier acquiring Accuity (US) for €393m
- IBM (US) acquiring i2 for €345m
PwC is pretty positive towards the outlook for M&A. Indeed, as we have said countless times, the structural changes in business models happening now ‘offer buyers compelling reasons to pursue acquisitions despite the tough market’.
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