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Market opportunities in security, mobile, cloud and data and analytics technologies will drive tech industry mergers and acquisitions (M&A) in 2015, according to a survey from KPMG.
The tax and advisory firm surveyed 738 U.S.-based finance officers and M&A professionals representing a variety of industries. Nearly half (47 percent) said technology will be the most active industry for mergers and acquisitions in 2015, followed by pharmaceuticals/biotechnology (33 percent).
More than 80 percent of the tech M&A professionals expect their clients to make at least one acquisition in 2015, with almost half (47 percent) expecting one to three acquisitions. Eleven percent said their clients will conduct 11 or more buys in 2015.
“Mobile tech will continue to be one of the active, if not the most active, sectors in the tech M&A market,” Mike Franson, managing director and head of technology M&A with KPMG, told eWEEK. “The aggregate value of mobile acquisitions were in excess of $30 billion last year, and the pipeline of deals continue at a torrid pace in 2015. Mobile apps continue to be strategic for operations and for the engagement of device users.”
Half of the survey respondents anticipate the average value of the acquisitions to be $250 million or less, followed by $250 to $999 million acquisitions (46 percent), and deals of $1 billion or greater (4 percent).
The primary motivators for technology deals are access to intellectual property and/or talent (50 percent); the acquisition of bolt-on technologies to enhance new products (42 percent); the acquisition of innovative technologies or products (41 percent); to enter into new markets (41 percent), and to expand existing technology platforms (40 percent).
Survey respondents said that the most common challenge to deal making in the year ahead will be the valuation disparity between buyers and sellers (67 percent).
Respondents also are concerned with the identification of suitable acquisition targets (39 percent) and the buyer/target alignment on post-deal execution strategy (25 percent).
In addition to M&A, 44 percent of respondents will focus on new product development to increase revenues in 2015. For 22 percent, the focus is geographic expansion. “Data analytics will play a large role in the M&A market as it did in 2014,” Franson said. “Through data analytics, the ability for the enterprise to gather, test and monitor will be critical across the technology landscape. Some form of data analytics will be embedded in every device.”