Digital disruption keeps dealmaking strong in tech industry for 3Q15

-- 3Q15 deal volume sets seventh consecutive post-dotcom-bubble record

-- 13 deals topped US$1b, but for the first time this year, none topped US$10b

Nov 03, 2015, 07:00 ET from EY

NEW YORK, Nov. 3, 2015 /PRNewswire/ -- Global technology M&A deal volume in 3Q15 reached 1,069 deals, in spite of the NASDAQ Composite Index declining 7% during the quarter — the first quarterly decline in three years. Meanwhile, 3Q15's aggregate value of disclosed value deals at US$65.4b ranked as the ninth highest since 1996, despite declining by 11% year-over-year (YOY) and 49% from 2Q15's post-dotcom-bubble record. These and other findings were released today in EY's Global technology M&A update: July-September 2015.

The report highlights that non-tech buyers rose 52% over 2Q15 to US$16.6b in 3Q15, scoring the highest-value 3Q15 deal for an Internet of Things (IoT) announced deal and tying for the top-value big data analytics deal. Non-tech buyers also had the second-largest deal in payments and financial services. Except for cloud/software-as-a-service (SaaS), these three deal-driving trends — IoT, big data analytics and payments and financial services technology — contributed the most to 3Q15 aggregate value. 

The deals also provided the highest-value examples of the increasingly blurry boundaries between the technology industry and other industries, and of deals that continue to be driven by other industries' digital transformations, which are being enabled by disruptive technologies. 

Jeff Liu, Global Technology Industry Leader, Transaction Advisory Services at EY, says:

"The M&A trends we identified this year include a strong focus on a solution-oriented philosophy, where customers no longer care about whether they're buying software, storage or security, for example. This continues to drive change in the technology landscape far faster than anyone imagined. Likewise, deal drivers are still accelerating because tech-enabled digital transformations disrupting multiple industries are only just getting underway. Expect even more transformative deals to come, including megadeals and new leaders emerging from adjacent industries."

The report finds that corporate tech buyers, which drove 2Q15's US$127.2b record-breaking value spike, normalized in 3Q15. However, their spin-offs and other divestitures accounted for a third of aggregate deal value or US$21.2b in 3Q15.

Private equity buyers, at US$15.4b, delivered their second-highest value quarter in the eight years that EY has produced these reports.

Other industry highlights:

  • Cross-industry blur increased again, as non-tech buyer volume and value rose.
  • Growth in deals targeting big data analytics, the IoT and payment and financial services technologies made the biggest contributions to value. Cloud/SaaS, smart mobility and security technologies continued as deal drivers.
  • Cross-border aggregate deal value slumped to US$24.1b, down 45% from 2Q15's record and 26% YOY.

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About the Global technology M&A update

The July-September 2015 issue is based on EY's analysis of The 451 Group M&A KnowledgeBase data for 2014-15. Deal activity and valuations may fluctuate slightly based on the date the database is accessed. The full report is available at Click here to access the report

Peter Kelley
EY Global Media Relations
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