|By PR Newswire||
|February 20, 2014 09:00 AM EST||
SAN JOSE, Calif., Feb. 20, 2014 /PRNewswire/ -- With a strong finish in technology deal activity in 2013, the outlook for 2014 points towards an accelerated pace as technology M&A continues to play a critical role for companies across industries to innovate and drive growth, according to PwC's US Technology Deals Insights 2013 Year in Review and 2014 Outlook report released today.
As companies look to talent, technology and portfolio additions to keep up with the pace of change, PwC expects the recent strength in technology deal activity to set the stage for a robust 2014, but with subdued levels of large platform acquisitions.
"Disruptive technologies are driving change at a dizzying pace, heightening the need for continuous innovation. M&A is playing an instrumental role for larger technology enterprises seeking to achieve growth," said Rob Fisher, PwC's US technology deals leader. "The abundant cash and marketable securities held by the top 25 technology companies at year end, and the record levels of capital being raised by private equity funds, is creating a tremendous atmosphere for technology M&A in 2014."
According to Deal Insights, cumulative technology deal value for 2013 closed at $99.8 billion, a decrease of three percent from 2012. A blossoming IPO market and growing valuations impacted mid-market deal volumes while overall value for the year was upheld by deals larger than $500 million. Total deal volume declined 18 percent ending the year at 204 closed transactions in 2013 compared to 249 deals closed in 2012. The increase in billion dollar deals resulted in average deal size increasing from $415 million in 2012 to $489 million in 2013.
Technology IPOs accounted for 16 percent of IPO value and 21 percent of IPO volume in 2013 and PwC anticipates continued growth in the technology IPO pipeline. In total, there were 51 IPOs, a substantial increase from 39 in 2012.
PwC finds that stabilization in global economies is paving the way for growth in cross-border deal activity with this trend continuing in 2014 as corporate and private equity buyers look to emerging markets for higher returns and accelerated growth trajectories. Domestic transactions comprised 62 percent of deal volume and 81 percent of deal value in 2013, compared to 71 percent of deal volume and 76 percent of deal value in 2012.
The report finds that software, accounting for 35 percent of technology M&A volume in 2013, remains at the forefront of technology deals as technology companies continue to expand into the cloud, mobility continues to grow, and more companies across industries leverage big data analytics.
- The lines between the Software and Internet sectors continue to fade, and cumulative value for the combined sub-sector deals representing 35 percent of total 2013 deal value, a decrease from 53 percent in 2012 largely due to a decline in billion-dollar software deals.
- The hardware sector showed mixed results, with the volume of transactions declining 22 percent but cumulative deal value increasing by 37 percent.
- The semiconductor sector showed strength in 2013 and represented 16 percent of overall technology transaction volume (33 deals) with a cumulative deal value of $10.7 billion, a 32 percent increase in value from 2012.
- IT services have similarly shown growth in 2013 with a 10 percent increase in volume and 32 percent increase in value, resulting in 34 deals closed and a cumulative deal value of $7.8 billion.
Despite the continued availability of cheap high yield and leveraged financing, and buoyant equity markets, private equity deal volume declined for the first time since 2009. Private equity deals comprised 31 percent of total technology deals with disclosed values in 2013 compared to 34 percent in 2012.
"2014 appears to have strong fundamentals for an increase in private equity deals. However, competition between financial and strategic buyers for high quality assets remains strong. Given the inherent ability of strategic buyers to justify higher valuations from synergies, we expect the trend of more private equity investments in the form of growth investments and add-on acquisitions to continue," added Fisher.
PwC found that divestiture activity remained strong during a robust IPO market as corporate buyers continued to optimize portfolio strategies. Divestiture transactions in technology increased 3 percent in 2013 to near 2009 and 2010 levels with 321 divestitures recorded in 2013 compared to 311 in 2012. Technology divestitures as a percent of total technology M&A volume rose from an average of 20 percent in 2012 to 22 percent 2013 in light of an overall decline in divestiture deal volume.
Cumulative divestiture deal value for transactions with disclosed deal values reached $17.9 billion in 2013 compared to $31.2 billion in 2012, a decrease of 42 percent. The top 10 divestitures of 2013 represented 81 percent of this value, an increase from 2012, when nearly 60 percent of total disclosed deal value was represented by the top 10 divestitures.
"User experience, new revenue models and process efficiencies will be at the heart of what technology companies want to accomplish with deal activity in 2014. The underlying theme is to enable intelligence for everything across industries," added Fisher.
The report outlines the following drivers for 2014 technology deals:
- Analytics Evolves. With large amounts of accumulated data, companies are evolving their approach to turn big data into actionable intelligence and improve user engagement with the business. PwC expects 'Big Data' to remain an active area of technology M&A.
- Building social, mobile and cloud platforms. Home grown platforms are often favored due to strategic and profit motives, but not all ecosystems are winners. As a result, companies continue to expand with proven platforms via acquisition in order to improve their offerings in cloud, social and mobile.
- Software-defined and the industrialization of hardware. With the increasing difficulty to generate a competitive advantage in building hardware, software continues to bring intelligence to bear by automating tasks, increasing technological capabilities and democratizing complex technology processes. PwC expects more software acquisitions that enable users to orchestrate traditional hardware tasks with software.
- Context awareness is key. As services continue to dominate the technology offering landscape, understanding how, when, where, and why someone is using the service is increasingly important. Areas such as local and social software, sensor technology, and mobile applications are among the components that will continue to drive acquisition interests.
- Technology is pervasive across industries. Technology companies of all shapes will focus on driving more industry specific solutions across health care, retail, banking, and industrial products among others. PwC anticipates that acquisitions will be a key vehicle for this activity.
- Security concerns continue unabated. From government information leaks to retail chain customer data, it is clear that more needs to be done to secure information - especially with the continued move to cloud and mobile technologies. PwC projects continued progress for large technology companies acquiring new security capabilities in 2014.
- Interface technologies and endpoints. From media consumption, transportation, or energy usage, increasingly our "things" are connected digitally. The ways in which consumers interact with their devices is also evolving, which includes touch, voice, facial recognition, among others. In 2014, PwC expects continued focus on innovations in these areas with large technology companies looking for new capabilities.
PwC's US technology Deals Insights is a quarterly analysis based on data for transactions with a disclosed deal value greater than $15 million, as provided by Thomson Reuters through December 31, 2013 and supplemented by additional independent research. Information related to previous periods is updated periodically based on new data collected by Thomson Reuters for deals closed during previous periods but not reflected in previous data sets.
PwC's Deals practitioners help corporate and private equity executives navigate transactions to increase value and returns. In today's increasingly daunting economic and regulatory environment, our experienced M&A specialists assist clients on a range of transactions from smaller and mid-sized deals to the most complex transactions, including domestic and cross-border acquisitions, divestitures and spin-offs, capital events such as IPOs and debt offerings, and bankruptcies and other business reorganizations. We help clients with strategic planning around their growth and investment agendas and advise on business-wide risks and value drivers in their transactions for more empowered negotiations, decision-making and execution. We help clients expedite their deals, reduce their risks, capture and deliver value to their stakeholders and quickly return to business as usual.
Our local and global deal strength is derived from over 1,400 deal professionals in 21 cities in the U.S. and over 9,800 deal professionals across a global network of firms in 75 countries. In addition, our network firm PwC Corporate Finance provides investment banking services within the U.S.
About PwC US
PwC US helps organizations and individuals create the value they're looking for. We're a member of the PwC network of firms in 157 countries with more than 184,000 people. We're committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US. Gain customized access to our insights by downloading our thought leadership app: PwC's 365™ Advancing business thinking every day
© 2014 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC US refers to the US member firm, and PwC may refer to either the PwC network of firms or the US member firm. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
SOURCE PwC US
Effectively SMBs and government programs must address compounded regulatory compliance requirements. The most recent are Controlled Unclassified Information and the EU's GDPR have Board Level implications. Managing sensitive data protection will likely result in acquisition criteria, demonstration requests and new requirements. Developers, as part of the pre-planning process and the associated supply chain, could benefit from updating their code libraries and design by incorporating changes. In...
Dec. 5, 2016 02:15 PM EST Reads: 1,075
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Dec. 5, 2016 02:00 PM EST Reads: 2,183
You have great SaaS business app ideas. You want to turn your idea quickly into a functional and engaging proof of concept. You need to be able to modify it to meet customers' needs, and you need to deliver a complete and secure SaaS application. How could you achieve all the above and yet avoid unforeseen IT requirements that add unnecessary cost and complexity? You also want your app to be responsive in any device at any time. In his session at 19th Cloud Expo, Mark Allen, General Manager of...
Dec. 5, 2016 01:45 PM EST Reads: 1,698
Get deep visibility into the performance of your databases and expert advice for performance optimization and tuning. You can't get application performance without database performance. Give everyone on the team a comprehensive view of how every aspect of the system affects performance across SQL database operations, host server and OS, virtualization resources and storage I/O. Quickly find bottlenecks and troubleshoot complex problems.
Dec. 5, 2016 01:15 PM EST Reads: 2,014
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
Dec. 5, 2016 01:15 PM EST Reads: 2,154
"Coalfire is a cyber-risk, security and compliance assessment and advisory services firm. We do a lot of work with the cloud service provider community," explained Ryan McGowan, Vice President, Sales (West) at Coalfire Systems, Inc., in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 5, 2016 01:00 PM EST Reads: 837
Without a clear strategy for cost control and an architecture designed with cloud services in mind, costs and operational performance can quickly get out of control. To avoid multiple architectural redesigns requires extensive thought and planning. Boundary (now part of BMC) launched a new public-facing multi-tenant high resolution monitoring service on Amazon AWS two years ago, facing challenges and learning best practices in the early days of the new service. In his session at 19th Cloud Exp...
Dec. 5, 2016 12:45 PM EST Reads: 665
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Dec. 5, 2016 12:34 PM EST Reads: 171
Major trends and emerging technologies – from virtual reality and IoT, to Big Data and algorithms – are helping organizations innovate in the digital era. However, to create real business value, IT must think beyond the ‘what’ of digital transformation to the ‘how’ to harness emerging trends, innovation and disruption. Architecture is the key that underpins and ties all these efforts together. In the digital age, it’s important to invest in architecture, extend the enterprise footprint to the cl...
Dec. 5, 2016 12:30 PM EST Reads: 2,287
Bert Loomis was a visionary. This general session will highlight how Bert Loomis and people like him inspire us to build great things with small inventions. In their general session at 19th Cloud Expo, Harold Hannon, Architect at IBM Bluemix, and Michael O'Neill, Strategic Business Development at Nvidia, discussed the accelerating pace of AI development and how IBM Cloud and NVIDIA are partnering to bring AI capabilities to "every day," on-demand. They also reviewed two "free infrastructure" pr...
Dec. 5, 2016 12:30 PM EST Reads: 942
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, sha...
Dec. 5, 2016 11:45 AM EST Reads: 927
Whether your IoT service is connecting cars, homes, appliances, wearable, cameras or other devices, one question hangs in the balance – how do you actually make money from this service? The ability to turn your IoT service into profit requires the ability to create a monetization strategy that is flexible, scalable and working for you in real-time. It must be a transparent, smoothly implemented strategy that all stakeholders – from customers to the board – will be able to understand and comprehe...
Dec. 5, 2016 11:38 AM EST Reads: 199
Businesses and business units of all sizes can benefit from cloud computing, but many don't want the cost, performance and security concerns of public cloud nor the complexity of building their own private clouds. Today, some cloud vendors are using artificial intelligence (AI) to simplify cloud deployment and management. In his session at 20th Cloud Expo, Ajay Gulati, Co-founder and CEO of ZeroStack, will discuss how AI can simplify cloud operations. He will cover the following topics: why clou...
Dec. 5, 2016 11:30 AM EST Reads: 763
CloudJumper, a Workspace as a Service (WaaS) platform innovator for agile business IT, has been recognized with the Customer Value Leadership Award for its nWorkSpace platform by Frost & Sullivan. The company was also featured in a new report(1) by the industry research firm titled, “Desktop-as-a-Service Buyer’s Guide, 2016,” which provides a comprehensive comparison of DaaS providers, including CloudJumper, Amazon, VMware, and Microsoft.
Dec. 5, 2016 11:30 AM EST Reads: 786
"Dice has been around for the last 20 years. We have been helping tech professionals find new jobs and career opportunities," explained Manish Dixit, VP of Product and Engineering at Dice, in this SYS-CON.tv interview at 19th Cloud Expo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Dec. 5, 2016 11:15 AM EST Reads: 940