Mergers, Acquisitions Drive Tech Industry to New Heights

The fourth quarter of 2015 was a megahit, ending a blockbuster year, with the value of disclosed-value deals growing by 323 percent.

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The fourth quarter of 2015 concluded a year of multiple global technology deal-making records, according to EY’s annual fourth quarter technology mergers and acquisitions (M&A) report.

This means 2015 set a new all-time high for annual tech M&A aggregate value, surpassing the previously set record in 2000.

The fourth quarter of 2015 was a megahit in a blockbuster year, ending with the value of disclosed-value deals growing by 323 percent compared to the same period in 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.

In the last year, 20 deals topped $1 billion, including three deals of more than $10 billion. However, despite the multiple value records, quarterly volume of 932 deals declined 3 percent year over year and 13 percent sequentially, ending a string of nine consecutive quarterly increases and seven consecutive post-dotcom-bubble volume records.

"Megadeals are a lot rarer than our experience in 2015 would suggest. Remember, even though there were eight in 2015, there were only six in the previous decade," Jeff Liu, EY global technology industry leader, transaction advisory services, told eWEEK. "I believe we’ll continue to see very high aggregate deal values for tech M&A in 2016, but they will likely fall back to Earth, or about half to two-thirds of the 2015 annual total. We envision new forms of close partnering, which we call industrial mash-ups, beginning to stand in for certain types of megadeals beginning this year."

The company’s 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.

"There are too many disruptive technologies, working separately and in combination, to name one the most disruptive," Liu said. "But think about the way that cloud, mobility, social and big data disruptive technologies have combined to yield Internet of things applications and sharing economy business models."

He noted both of those are enabled by the confluence of all those disruptive technologies, and have powerful long-term potential to disrupt many industries, and said the market will definitely will see more examples of these kinds of economic disruptions.

The report also forecast 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.