Cloud, smart mobility drive tech M&A in Q2

Cloud SaaS

by CBR Staff Writer| 22 August 2014

global technology M&A rose by 57%.

Cloud and smart mobility have been responsible for about 42% of technology deal, with the global technology M&A rising by 57% to $52.4bn this year, a new report revealed.

The latest report from Ernst & Young revealed that the disclosed value of M&A deals rose by 70% to $119bn during the second half of 2014, while the value dropped 21% in 2Q14 compared to Q1.

Ernst & Young Global Technology Industry Transaction Advisory Services leader, Jeff Liu, said: "Global technology M&A is on course for a blockbuster year in 2014. Technology companies are cash rich, and interest rates are low.

"Moreover, rapidly changing technology continues to create many new opportunities and so far in 2014, equity markets have remained resilient, exhibiting low volatility despite growing geopolitical unrest.

"That reinforces executives' confidence in the global economy and, in M&A, makes it easier for buyers and sellers to agree on valuations.

"Cloud/Software-as-a-Service (SaaS) and smart mobility continued to drive 2Q14 technology deal-making, together accounting for more than 42% of volume for the quarter."

Financial technology reported 60 deals during the quarter, up 50% than its 2013 quarterly average and reached $8.7bn, up 141% than corresponding quarter earlier year.

Deal volume increased by 39% year-over-year (YOY) and 15% successively to 872 deals and at corporate volume reported 806 deals, reporting its fourth consecutive increase, up 17% successively and year-over-year rise of 41%.

During the quarter, private equity (PE) volume dropped by 6% consecutively following five consecutive quarterly increases, while rose 16% YOY and its aggregate value reached $5.9bn, declined 55% sequentially and 58% YOY.

In addition, the average value of PE deals reached $266m, reporting 41% drop sequentially and 58% YOY, marking the lowest level in three years.

However, the overall average deal value declined 24% consecutively and 7% YOY to US$231m, the report added.

Liu added: "Nothing less than a technology-induced reinvention of all industries has begun, moving toward 'sense and respond' relationships between businesses and their customers and driven by the five transformational technology megatrends: smart mobility, cloud computing, social networking, big data analytics and accelerated technology adaptation.

"At the same time, macroeconomic conditions are supporting dealmaking with low interest rates, appealing lending terms and stability in equities markets.

"This confluence of factors will continue to drive record, or near-record, global technology M&A for the foreseeable future."

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