Technology Dealmakers More Optimistic in Latest Morrison & Foerster/451 Research M&A Leaders Survey

   Technology Dealmakers More Optimistic in Latest Morrison & Foerster/451
                         Research M&A Leaders Survey

Half of tech execs surveyed expect M&A to increase in 2014, vs. only 7 percent
forecasting a pull-back; majority say M&A could reach pre-recession levels
within five years; MoFo and 451 Research to present findings in webinar on
Nov. 7

PR Newswire

SAN FRANCISCO and NEW YORK, Nov. 7, 2013

SAN FRANCISCO and NEW YORK, Nov. 7, 2013 /PRNewswire/ --Technology dealmakers
may be showing a little spring in their step heading into 2014, according to
the latest M&A Leaders Survey issued jointly by global technology and M&A law
firm Morrison & Foerster and syndicated technology research firm 451 Research.

In their latest canvass of tech industry insiders, MoFo and 451 Research found
participants modestly bullish about the pace of mergers and acquisitions, both
in recent months and looking ahead. Forty percent said the past six months
generated more deal activity than at any point in the past two years, compared
with 36 percent saying the same period produced less M&A work. Even more
striking, 50 percent said they expect M&A activity to pick up in the next six
months – vs. only 7 percent projecting a slowdown. More industry insiders are
also predicting an uptick in the number of bidders vying for deals, as well as
an increase in private company valuations – more signs that the market may be
gaining traction.

The new poll represents the views of nearly 200 C-suite and corporate
development executives, in-house counsel, investment bankers, venture
capitalists and financial advisers within the tech sector. Conducted twice a
year, the M&A Leaders Survey is the only research of its kind to take the
pulse of technology professionals on the state of the deal economy.

Morrison & Foerster and 451 Research are co-hosting an online review of the
new M&A Leaders Survey on Thursday, November 7 from 1:00 p.m. to 2:00 p.m ET.
Here is a link to register: https://www1.gotomeeting.com/register/700102344.

"It's encouraging to note that even with the sluggish pace of economic
recovery and continued concerns over Washington's fiscal crisis, very few
surveyed individuals expect a slowdown in M&A activity in coming months, and
most see a good chance of recovery to pre-recession levels within five years,"
said Morrison & Foerster's Robert Townsend, co-chair of the firm's Global M&A
practice. "While deal volume remains at a relatively low level, a number of
high-profile, high-priced acquisitions have occurred this year that suggest
large corporations are again willing to turn to M&A to address fundamental
competitive challenges."

The M&A Leaders Survey draws from a wide range of technology influencers: 17
percent identify themselves as C-level executives, along with 31 percent
corporate and business development professionals and 10 percent in-house
counsel. More than 40 percent work on the deal side – mostly in investment
banking and financial advisory services, with the rest in venture capital and
private equity. Nearly half of participants are based in Silicon Valley, with
12 percent in the New York area, and others located throughout the United
States, Asia, the UK and continental Europe.

Bear count down, analytical caution

Looking ahead six months, 50 percent of participants expect M&A activity to
increase, versus just 7 percent anticipating a decline. The low bear count is
in sharp contrast to last April's survey, when nearly 20 percent projected a
decline in deal flow. However, in his survey analysis, Brenon Daly, research
director for M&A at 451 Research, cautions that any bullishness should be
tempered by broader downshifting in deal velocity and scale.

451 Research reports that tech M&A volume globally is down 15 percent
fromwhere it was a year ago, and down even more compared to the same period
in 2011. "The prolonged downturn may be a secular – rather than cyclical –
change in the multibillion-dollar tech M&A market," Daly said. "More than a
few buyers and advisers say they are adjusting their acquisition plans to this
'new normal.'"

Trying to Regain Pre-Recession Form

The latest survey posed a new question to tech dealmakers: What is the
likelihood that M&A spending will return to prerecession levels within five
years? Forty percent felt confident that spending will recover by 2018, while
another 31 percent put the odds at 50-50. Daly notes that spending would have
to roughly double to reach 2006-07 levels – and that "growth has...been tough
to come by for many of the most active acquirers" in the tech industry.

Participants were asked what it would take to restore M&A activity to
pre-recession form. Some look to top-line growth in industry giants:
"Valuations for the largest consolidators need to come back," said one
participant, while another noted, "The desktop business is being disrupted by
cloud, mobile and app vendors...if the large vendors do not acquire they will
become disrupted." Alternatively, said one executive, what's needed is a
"continued active IPO market so the buyer universe is expanded." Another
expands on that point: "The stage is being set with a significant group of
newly public companies who will be transitioning into M&A mode as they settle
into being public."

Human Capital Drivers of M&A

In general, respondents expect greater emphasis on the human capital aspects
of deals, with50 percent forecasting an increased focus on assessing talent
at targets prior to acquisition and 40 percent calling for more types of deal
structures for retaining key employees post-acquisition. A smaller number (30
percent) predict an increase in M&A primarily as a means of acquiring
employees (so-called "acqui-hires"). Almost half of respondents report that
they have often seen both the price and structure of an acquisition affected
by the need to incentivize a target's employees. Executives said that the
strongest retention incentives were the granting of new stock options or RSUs
(restricted stock units), followed by the payment of future cash bonuses.

"Our latest survey shows that tech dealmakers are feeling more upbeat these
days," said Morrison & Foerster corporate partner David Lipkin, who advises
clients in mergers and acquisitions and related securities law matters. "A
sizable group reports being more active than at any time since the recession,
with particular emphasis coming in such sectors as cloud computing, mobile
apps and cybersecurity. And many are betting that M&A will come back to
pre-recession levels over the next few years. There is still ample basis for
uncertainty but it appears that for a growing number of players, the glass is
increasingly looking more than half full."

MoFo Enjoying Strong Year in Tech M&A

While overall technology M&A volume has dropped the past two years, Morrison &
Foerster has consistently been where the action is. In a deal that closed this
past June, the firm advised leading Japanese wireless carrier SoftBank in its
$21.6 billion acquisition of a 78 percent stake in Sprint, the largest
outbound acquisition ever by an Asian company. MoFo advised SoftBank on two
other billion-dollar deals in October – its $1.53 billion joint venture
investment in leading Finnish mobile game developer Supercell Oy; and its
$1.26 billion control investment in Miami-based wireless distributor
Brightstar Corp. In other noteworthy M&A tech deals, the firm recently
represented:

  oMarket-leading radio consumer research company Arbitron in its $1.3
    billion acquisition by Netherlands-based Nielsen Holdings N.V.A.;
  oLeading global semiconductor chip maker Intel in several large
    transactions in the United States and Europe;
  oTsinghua Unigroup in its $1.8 billion acquisition of Spreadtrum
    Communications, a Shanghai-based fabless semiconductor developer and
    design company (the largest semiconductor acquisition globally in more
    than a year);
  oCybersecurity services provider Sourcefire in its $2.7 billion acquisition
    by Cisco Systems.

Overall, the firm has handled on some 20 M&A assignments valued at $1 billion
or higher in the past year, including 11 that closed in 2013.

The link to analysis of survey results is available here.

Morrison & Foerster has drawn multiple accolades recently for its M&A
practice. The American Lawyer honored MoFo for its Grand Prize Global Deal of
the Year, in recognition of the firm's role advising SoftBank in its
acquisition of Sprint. M&A Advisor named MoFo Law Firm of the Year for the
second straight year and Law 360 designated the firm for M&A Group of the
Year. The strength of the M&A practice also played a key hand in the selection
of MoFo as USA Law Firm of the Year by Chambers Global. And it was named
Information Technology Law Firm of the Year by U.S. News/Best Lawyers and the
No. 1 Technology Law Firm for 2014 by the Vault Guide. Legal 500 ranks MoFo as
the only firm in Band 1 for Technology across China, Hong Kong and the United
States.

Earlier this week, Morrison & Foerster announced the opening of its Berlin
office – this is the firm's first office in Germany, third in Europe and 17^th
worldwide. The Berlin team, comprised of approximately 30 German lawyers, has
top-ranked practices with a special focus on mergers, acquisitions and other
transactions in the technology, media and telecommunications (TMT) sector. The
Berlin team is also highly regarded for its work with clients in the
transportation, real estate, private equity and financial services sectors.
The group serves multinational clients on a wide array of matters, including
cross-border Germany-bound transactions as well as transactions within
Germany. The team has advised on highly visible transactions including the
acquisition and sale of ProSiebenSat.1 Media, the acquisition of Sky
Deutschland, the takeover of Schmolz and Bickenbach, and the acquisition of
the rights to the German Soccer League.

ABOUT MOFO
Morrison & Foerster is a global firm of exceptional credentials. With more
than 1,000 lawyers in 17 offices in key technology and financial centers in
the United States, Europe and Asia, we advise the world's leading financial
institutions, investment banks and technology, telecommunications, life
sciences and Fortune 100 companies. We've been included on The American
Lawyer's A-List for 10 straight years, and Chambers Global named MoFo its 2013
USA Law Firm of the Year. Our lawyers are committed to achieving innovative
and business-minded results for our clients, while preserving the differences
that make us stronger.

From: Stephanie Marrone, Director of Communications
      212-336-4179 smarrone@mofo.com

SOURCE Morrison & Foerster
 
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