Mergers and acquisitions in the tech sector last year reached their highest volume and value since the height of the dot- com bubble in 2000, according to a report from financial analyst firm Ernst & Young (EY).
Mid-sized deals, ranging from $100 million to $1 billion, remained strong and deal volume in this category set another new post-dot-com bubble record, EY said.
The tech sector posted 3,512 deals in 2014, with 959 deals executed in the fourth quarter, setting a fourth consecutive post-dot-com bubble quarterly record. In 2007, previously the most active year since 2000, mergers and acquisitions in the sector totaled 3,345.
The report indicates that firms are prepared to invest in game-changing deals, with major initial public offerings (IPOs) that don’t necessarily reflect the over-hyped bubble that crushed many dot-com era darlings.
“The valuation environment is certainly robust and at levels not seen since the late 1990s — there have been some hallmark IPOs and M&A trades,” Jeff Liu, global sector head for technology for EY’s transaction advisory services, told eWEEK. “However the disruptive trends creating these high multiples are much less ‘bubble-like’ in nature than their dot- com precedents.”
Aggregate deal values jumped for advertising and marketing, security and Internet of things deals. The fourth-quarter totals for advertising and marketing, in particular, were more than their year-to-date totals for the three previous quarters combined.
While 2015 may not hit the same lofty highs as 2014, EY said it expects another robust year of M&A activity in response to sweeping technology transformations across all industries in the global economy.