Digital transformations drive a blockbuster second quarter for global technology M&A

NEW YORK, Aug. 18, 2016 /PRNewswire/ -- With 28 deals at or above US$1b, Q2 2016 now holds the all-time record for most big-ticket global technology M&A deals, 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 to near unprecedented dealmaking levels for the technology sector overall. Aggregate value for the quarter was US$127.2b, up 91% from Q1 2016, ranking this quarter as the third-highest technology M&A quarter ever by value.

Quarterly volume is also on the rise with 1,039 deals, an increase of 4% sequentially and 2% YOY. So far this year, the global technology sector has seen 2,041 deals, 2% ahead of 2015's post-dotcom-record pace.

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

"Near-record value and volume levels in the second quarter show that technology M&A continues to be the most important tool of choice to help corporate strategy keep pace with unprecedented disruption emerging as a result of rapidly advancing digital technologies."

M&A records set by private equity (PE) firms, non-tech and Chinese buyers

Despite a larger number of big-ticket transformation deals, corporate tech buyers announced only one megadeal (above US$10b) in Q2 2016, compared with three in Q2 2015. This led to a YOY decline in corporate tech's disclosed value. However, PE and non-tech buyers made up for the falloff, with Chinese buyers playing a major role.

• PE: US$25.7b in disclosed-value technology deals by PE buyers made Q2 2016 the highest-value PE quarter on record. With 95 deals, it is the second-highest-volume PE quarter, falling just short of Q3 2010 (99 deals).
• Non-tech: The aggregate value of deals from companies outside of the sector buying technology companies jumped 95% YOY to US$21.3b. Volume from non-tech buyers also increased, by 28% to 159 deals. As a result, 2016 is now ahead of 2015's non-tech-buyer pace in both value and volume.
• China: Chinese buyers recorded their highest-value technology quarter ever with US$32.3b in disclosed-value deals. It brought their year to date (YTD) total to US$47.4b, which is already 19% ahead of their entire 2015 value of US$39.9b.

Digital disruption provides a boost to ongoing technology M&A strength

Accelerating growth of the Internet of Things (IoT) and big data analytics was a major factor shaping Q2 2016 technology M&A. The number of deals driven by these disruptive digital technologies increased at a faster pace than all others for both Q2 2016 and YTD, well above the single-digit pace of overall global volume increases. IoT volume rose 28% YOY for Q2 2016 and 26% YTD; big data analytics volume rose 13% for the quarter and 29% YTD.

Liu says, "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."

To view a full copy of the EY Global technology M&A report — April-June final look, visit: http://ey.com/GL/en/Industries/Technology/ey-global-technology-mergers-and-acquisitions.  

Notes to Editors

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About EY's Global Technology Sector

EY's Global Technology Sector is a global network of more than 21,000 technology practice professionals from across our member firms, all sharing deep technical and industry knowledge. Our high-performing teams are diverse, inclusive and borderless. Our experience helps clients grow, manage, protect and, when necessary, transform their businesses. We provide assurance, advisory, transaction and tax guidance through a network of experienced and innovative advisors to help clients manage business risk, transform performance and improve operationally. Visit us at ey.com/technology.

About the EY Global technology M&A update: April-June 2016

The April-June 2016 issue is based on EY's analysis of The 451 Group M&A KnowledgeBase data. Deal activity and valuations may fluctuate slightly based on the date the database is accessed. The full report is available at http://ey.com/GL/en/Industries/Technology/ey-global-technology-mergers-and-acquisitions.  

Virginia Milazzo
EY Global Media Relations
+1 212 360 9261
[email protected]

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