Global Technology M&A Activity Characterized by More Deals but Lower
Valuations in 2012, According to IDC
FRAMINGHAM, Mass. -- April 4, 2013
Following two consecutive years of substantial growth in merger & acquisition
(M&A) activity in the global information and communication technology (ICT)
sector, 2012 produced a more mixed set of results. According to a new study
from International Data Corporation (IDC), deal volume saw double-digit gains
in 2012 while deal valuations experienced a sharp decline and initial public
offerings (IPOs) were nearly flat.
The total number of deals topped 3,800 in 2012 and registered a solid gain of
14.2% year over year, although the quarterly trend showed deal volume slowly
declining over the course of the year. In contrast, the value of disclosed
deals fell more than 10.8% year over year in 2012 to $211.0 billion, but
displayed steady improvement on a quarterly basis as the year progressed.
"The opposing trend between deal volume and deal value is not surprising,"
noted Ryan Patterson, Manager, Global IT Advisor and Private Vendor Watch
Service at IDC. "In a slow economy, we typically see an increase in the number
of deals, and lower values, driven by "fire sales" of troubled companies, an
increase in asset sales by companies refocusing on their core business, and
acquisitions by private equity (PE) firms looking to capitalize on lower
valuations. All of these trends were prominent in the recession years of
2008-2010. The current levels of M&A activity are far from what was
experienced during those gloomy years and there are plenty of reasons to
believe that the market will maintain a healthy pace in the months ahead."
Highlights from IDC's 2012 global technology M&A analysis include the
*PE-backed M&A activity soared in 2012, totaling 230 deals compared to 180
in 2011, a 27.8% increase year over year. The total disclosed value of
PE-backed deals reached $43.0 billion in 2012 compared to $39.2 billion in
2011. In addition, PE firms were involved in 17 billion-dollar-plus deals
– almost a third of all deals in this range.
*The enterprise applications market accounted for the largest portion of
disclosed deal value, with approximately $50.5 billion worth of deals in
2012. This was achieved despite a year-over-year decrease of more than 11%
in disclosed enterprise applications deals. Mobile deals was the second
largest area of activity with $40.1 billion in disclosed deals, more than
half of which came in the Softbank acquisition of Sprint-Nextel, followed
by telecom deals ($33.0 billion) and Internet deals ($27.5 billion).
*The most active buyer in 2012 was Constellation Software with 18 deals,
carried out mainly in various vertical applications markets through its
fully-owned subsidiaries. After two consecutive years at the top of the
most active buyers list, Google slipped to second with 17 deals in 2012.
Facebook was number 3 on the list with 15 acquisitions, followed by Intel
and Publicis Groupe with 12 each.
*On a geographic basis, the United States remained the main market for tech
M&A activity with more than 2,200 deals in 2012. The share of U.S. M&A
activity in terms of disclosed deal value was $132.8 billion or 65.3% of
the worldwide total.
*Despite early optimism for the IPO market, with 17 companies going public
in the first quarter of 2012, the year ended with a total of 43 public
debuts, just a few better than the 39 IPOs in 2011. Although the total
amount raised in 2012 IPOs reached a staggering $21.1 billion, this total
is almost entirely attributable to Facebook's IPO in May.
"One of the most important opportunities to surface in 2012 was the emergence
of the 3rd Platform, built on the four pillars of cloud, mobile, Big Data, and
social technologies," said Dan Yachin, Research Director, Emerging
Technologies, IDC EMEA. "As companies move to invest more heavily in these
technologies for the future, there was a burst of M&A activity as vendors
sought to position themselves for this critical shift in the market. IDC
tracked 710 deals – 18.6% of all M&A deals in 2012 – associated with the four
technologies that constitute the new platform. IDC expects the 3rd platform
will continue to be an important driver of M&A activity going forward, helping
to push activity levels on an upward trend again."
An IDC infographic depicting the impact of M&A deals across the four pillars
of social, mobile, Big Data and analytics, and social technologies in 2012 is
available at http://www.idc.com/M_A4pillars.jsp.
The IDC study, 2012 Tech M&A and IPO Analysis Report (Doc #239406), provides
an overview and analysis of M&A deals in 2012 across all major sectors of the
ICT industry, including IT infrastructure, telecommunications, enterprise
applications, IT services, semiconductors and components, Internet, and
mobile. It also discusses the different business, financial, and technology
trends affecting M&A activities in the ICT industry.
International Data Corporation (IDC) is the premier global provider of market
intelligence, advisory services, and events for the information technology,
telecommunications, and consumer technology markets. IDC helps IT
professionals, business executives, and the investment community to make
fact-based decisions on technology purchases and business strategy. More than
1,000 IDC analysts provide global, regional, and local expertise on technology
and industry opportunities and trends in over 110 countries. For more than 49
years, IDC has provided strategic insights to help our clients achieve their
key business objectives. IDC is a subsidiary of IDG, the world's leading
technology media, research, and events company. You can learn more about IDC
by visiting www.idc.com.
All product and company names may be trademarks or registered trademarks of
their respective holders.
Ryan Patterson, 508-988-6857
Michael Shirer, 508-935-4200
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