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PE deal making soars while corporate activity slides for Q2 2013 technology M&A

Ernst & Young’s global technology update for the second quarter of 2013 shows a mixed picture, with private equity (PE) deal-making soaring while corporate deal-making continued a three-quarter-long slide.

 
At USD33.4bn, the aggregate value of all disclosed-value deals is essentially flat year-over-year (YOY) and down eight per cent sequentially from Q113. Deal volume in Q213 fell to the lowest level since 2010 with 627 deals, down 14 per cent YOY and five per cent sequentially.
 
In contrast, PE volume increased for the second consecutive quarter, up 10 per cent YOY and 24 per cent sequentially. PE’s aggregate value soared 208 per cent YOY to USD13.9bn from USD4.5bn in Q212.
 
Corporate aggregate value of disclosed value deals fell 32 per cent YOY to USD19.5bn and, at 570 deals, corporate volume hit its lowest quarterly level since 2009 (when every quarter had fewer deals). Cross-border (CB) deal volume declined 24 per cent YOY to 195 deals and deal value fell 63 per cent YOY to USD6.4bn.
 
Yet the value of strategic technologies was on prominent display in Q213, as innovation around the five megatrends (mobile-social-cloud, big data analytics and accelerated technology adaptation) drove most of the top 10 deals for the quarter. The report also notes many small deals around three emerging categories of megatrend-enablers: application programming interfaces (APIs), "devops" and mobile back-end as a service (MBaaS).
 
Joe Steger, EY’s global technology industry, transaction advisory services leader, says: "Given the deal-driving force of the five transformative technology megatrends of mobile-social-cloud, big data analytics and accelerated technology adaptation, it might seem surprising that global technology M&A levels of activity aren’t higher. But, there are a set of counterbalancing forces holding down the expected levels of activity. These include macroeconomic and geopolitical uncertainty, unresolved regulatory, fiscal and tax issues and valuation gaps. Collectively, these forces may be causing M&A to reset to lower levels of activity across all industries. That said, I expect the strength of the five megatrends to prevail in technology, resulting in slow, steady M&A growth."

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