M&A in the technology sector has defied the downturn in acquisition activity seen during 2011, research from PricewaterhouseCoopers (PwC) shows.
M&A in the technology sector has defied the downturn in acquisition activity seen during 2011, research from PricewaterhouseCoopers (PwC) shows.
Despite a fall of 10 per cent in deal volume, from 393 to 354, the average deal size has continued to grow, and total deal value reached €69 billion (£57 billion) during 2011, a figure which is 90 per cent higher than the 2009 low.
The list of top 10 global technology deals in 2011 was headed by enterprise software business Autonomy, which was acquired by technology giant Hewlett Packard for €8.2 billion in a deal completed in October.
Rob Morgan, technology sector leader in corporate finance at PwC, comments: ‘Strategic acquisitions continue against a backdrop of long-term mega-trends playing out across the technology landscape.
‘These trends are impacting the way technology providers address the changing needs of business, governments and consumers.’
The report finds that both corporate and private equity buyers were prepared to use ‘substantial’ amounts of capital in the fourth quarter of the year when PwC says that the capital markets were in ‘hibernation’.
Philip Shepherd, technology sector leader in deal strategy at PwC, says trends in 2011 have been geared towards the increased value placed on intellectual property, with patent acquisition being the key driver behind a number of deals.
Morgan adds: ‘Cash remains king. At a time when debt is hard to raise, those with cash are doing deals – and technology companies, particularly at the larger end of the market, have significant cash reserves which they are looking to deploy through M&A.’
Looking at the UK, Matt Cross, technology sector leader in transaction services at PwC says that companies such as Wolfson, ARM, CSR and Imagination Technologies could become ‘attractive acquisition targets in the near future’.
Cross adds: ‘Whilst in terms of overall size, the UK is a relatively minor player in the global technology market; it is home to a large number of high quality chip design companies.’
