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Security and payment, cyber security and Internet of Things (IoT) technologies saw big growth in the mergers and acquisition market in the first quarter of 2015, according to a report from financial analyst firm EY.
The aggregate value of disclosed deals in the quarter hit $77.1 billion, higher than any quarter since the height of the dot-com bubble in 2000, and up 16 percent year-over-year and 72 percent sequentially.
Overall, IoT and health care IT drove the biggest value deals of 1Q15, followed by cyber security, financial and payment technologies, smart mobility and the cloud.
“IoT is about enabling all industries’ everyday products with information technology–sensors, processors, wireless network connectivity and security to protect it all,” Jeff Liu, global sector head of technology, transaction advisory services, for EY, told eWEEK. “The size of that opportunity is game-changing. That’s why technology companies are seeking appropriate technologies to support or create IoT business strategies, and doing so through M&A, as appropriate, to accelerate their development.”
Liu noted it’s also why so many non-technology companies are investing in M&A to acquire IoT-related technologies–to drive technology-enabled innovation or protect their competitive position.
Private equity volume and value declined, but non-technology buyers increased value, again, after a strong fourth quarter in 2014, the report noted.
However, non-technology buyers more than took up the slack. At $19.5 billion, they more than doubled their 4Q14 total and showed more than a six-fold increase over the first quarter of 2014.
Meanwhile, cross-border aggregate deal value more than doubled year-over-year, and jumped 59 percent sequentially–capturing a 42 percent share of total quarterly value.
“Q1 has kicked off 2015 to the strongest start for global technology M&A of any year since 2000, the peak of the dot-com bubble,” Liu said. “And from the headlines we’ve seen so far in Q2, the technology M&A momentum continues. I don’t have to be very prescient to predict that 2015 will be another blockbuster year for technology M&A.”
He said he is certain the impact of the cloud, cybersecurity concerns, disruptive technologies and digital innovation will continue to increase for the foreseeable future.
“That means technology and non-technology company business strategies will continue to rapidly evolve, which in turn means they will continue to build out new kinds of end-to-end solutions, find new hidden gems among their business units, discover other business units that no longer fit their strategies,” he explained. “So barring a significant increase in macroeconomic uncertainty, we can expect technology M&A to remain at this elevated level.”