Smart mobility, software-as-a-service (SaaS), big data, online video and the changing character of social networking have driven the deal volume of merger and acquisitions (M&A) in 1Q12.
In the first quarter of 2012, the aggregate deal value of global technology M&A fell 12% year-on-year to $25.1 billion.
This was only half the value decline of M&A in all industries, as ongoing economic uncertainty continues to take its toll on global deal-making. Private equity (PE) deal values for technology, meanwhile, climbed 171% YOY in 1Q12, despite falling significantly in all industries, according to Ernst & Young's "Global technology M&A update: January-March 2012" report.
The total volume of announced 1Q12 deals was 756 (counting both disclosed- and non-disclosed-value deals), up just one percent from 748 in 1Q11. Quarterly deal volume appears to have reached a plateau after two years of strong growth in 2009 and 2010 -- for the last five quarters the number of deals has ranged from a low of 722 to a high of 756.
Joe Steger, Global Technology Industry Transaction Advisory Services leader at Ernst & Young, said: "Even though technology M&A activity is down YOY, it's doing a lot better than M&A in other industries. During the first quarter of 2012, the same disruptive megatrends that have been fueling global technology M&A since 2009 are now sustaining technology M&A against the continuing macroeconomic pressures that are holding back other industries. And the long-term outlook for technology M&A remains positive because those megatrends represent the driving force of disruptive innovation that is revitalizing and reshaping the technology industry."
Steger was alluding to five long-term megatrends that are generating disruptive innovation in technology and leading to technology-enabled innovation in other industries. They are smart mobility, cloud computing, social networking, big data analytics and a growing sense of "blur" and convergence, as technology sectors come together and the technology industry enters other industries as enabling innovation. In addition, all five megatrends are driving increased information security requirements.