Tech megadeals rise in 4Q15, driving 2015 to all-time value record

- 4Q15 aggregate value of disclosed-value deals grew 323% YOY to US$189.8b

- 2015 had highest-ever annual value of US$459.6b, 11% over the US$412.4b record set in 2000

- Global technology M&A values and volumes expected to remain high in 2016

Jan 27, 2016, 07:00 ET from EY

NEW YORK, Jan. 27, 2016 /PRNewswire/ -- The fourth quarter of 2015 concluded a year of multiple global technology dealmaking records, meaning that 2015 set a new all-time high for annual tech M&A aggregate value, surpassing the previously set record in 2000, according to EY's Global technology M&A report: October-December 2015 first look.

The fourth quarter of 2015 ended a blockbuster year with a "megahit" quarter, with the value of disclosed-value deals growing by 323% compared to the same period in 2014. EY expects the forces behind 4Q15's deal value to continue in 2016 as massive digital transformation caused by disruptive cloud, mobile, social and big data analytics technologies is still in its infancy. Consequently, many tech vendors will continue addressing the growing need for high-performance cloud data centers to handle the data storage and processing load those digital transformation trends require. This will lead some companies to continue seeking scale and end-to-end solutions, while others will still privately manage their own transformation away from public-market scrutiny.

Further, the mix of deals will change with the rise of a new form of dynamic and increasingly automated partnering EY calls 'industrial mash-ups'. Over time, more automated access to business functions will emerge to enhance industrial mash-ups by helping drain the friction out of these fast-evolving business relationships.

Divestitures are likely to rise, and non-tech companies will increasingly acquire tech, driving-up cross-industry blur. The report found that non-tech buyer disclosed-value more than doubled in 2015, increasing 124% to US$53.6b from US$23.9b. Private equity (PE) value in 2015 rose to US$55.9b, up 41%.

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

"Global technology M&A values and volumes will remain high but moderate in 2016. As digital technology transforms other industries, more complex ecosystems are evolving to deliver complete solutions. A powerful new partnering form we call 'industrial mash-ups' will increasingly stand in for M&A in such situations."

Other industry highlights:

  • In 4Q15, 20 deals topped US$1b, including three of more than US$10b.
  • Despite the multiple value records, quarterly volume of 932 deals declined 3% YOY and 13% sequentially, ending a string of nine consecutive quarterly increases and seven consecutive post-dotcom-bubble volume records. At 3,996 deals, annual volume increased 14% from 2014.
  • Deals targeting the internet of things (IoT) technologies rose, even as the volume of other deal-driving trends fell.
  • From a value perspective, cloud/software as a service (SaaS); mobility; security; payments and financial technologies; advertising and marketing; gaming; and online video all finished strong in 4Q15.
  • Cross-industry blur increased again, as non-tech buyer volume rose despite the overall volume (YOY and sequential) decline.
  • Cross-border aggregate deal value rose to US$27.5b, up 14% more than the US$24.1b in 3Q15 — but was only 14% of total 4Q15 value.

Notes to Editors

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About the Global technology M&A report

The October-December 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

Virginia Milazzo                                                      Michael Gallo
EY Global Media Relations                                      Gutenberg Communications
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