1PwC Tracks Top IT Industry Acquisition Targets for 2016/2017
22016 Was a Banner Year for Tech M&A
Last year was an impressive year for technology mergers and acquisitions, PwC data shows. The company counted 1,613 acquisitions, totaling $323.5 billion in cumulative transaction value. While the number of acquisitions was down by 16 percent compared to 2015, the total value was up 3 percent year over year, thanks to a larger number of big deals.
3There Were 61 Deals That Exceeded $1 Billion
4‘Non-Digital Buyers’ Snap Up IT Companies
Non-digital buyers, or those that might not have a major online technology presence, were very active last year. In the fourth quarter alone, they bought 167 technology companies. According to PwC, “non-digital buyers” are acquiring technology companies to expedite their “transition into more digital business models.” Those non-digital buyers are most likely to be retail, automotive and healthcare companies.
5Software Is in High Demand
6IT Services Are Important
7Big Investments in Semiconductors
Semiconductor companies weren’t necessarily in high demand, but when they did sell in 2017, they fetched high prices. In fact, fewer than 100 semiconductor companies were acquired last year, but their deal volume reached $78.3 billion, putting them in second place behind software for the most segment spending.
8The U.S. Is Still the Epicenter
The United States is still the place to be for companies hoping to be acquired. During 2016, 1,398 of the more than 1,600 technology companies that were acquired were headquartered in the United States. Europe came in second place with 97 deals. Asia-Pacific tallied 59 deals and Africa/Middle East saw 12 acquisitions.
9Acquisition Multiples Soar
Multiples, or the metrics by which companies are acquired, were up in 2016. According to PwC, the Software segment’s revenue multiple led all others at 3.5x. It also was tops in earnings before interest, taxes, depreciation and amortization (EBITDA), where its multiple stands at 18.8x. Hardware companies fetch the smallest multiples with values based on revenue at 1.4x and EBITDA at 12.2x.
10Software Acquisitions in 2017 Will Continue
11Expect to See More Buyers in 2017
Although multiples are rising and competition is already fierce for technology companies, PwC doesn’t see the acquisition trend slowing anytime soon. Quite the contrary: The consulting firm says more buyers—including private equity companies, non-digital buyers and others—will be looking for targets in the new year. But PwC doesn’t anticipate any big semiconductor acquisitions in 2017.