Welcome!

News Feed Item

Strong Fundamentals Set the Stage for Technology Deals Uptick in 2014, According to PwC US

Abundance of Cash Reserves from Technology Majors and Record Levels of Private Equity Capital Fuel Deal-making in 2014

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.

PwC logo.

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.  

For more information about M&A and related services in the technology industry, please visit www.pwc.com/us/deals or www.pwc.com/technology.

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

Learn more about PwC by following us online: @PwC_LLP, YouTube, LinkedIn, Facebook and Google +.

© 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.

Logo: http://photos.prnewswire.com/prnh/20100917/NY66894LOGO

SOURCE PwC US

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
To leverage Continuous Delivery, enterprises must consider impacts that span functional silos, as well as applications that touch older, slower moving components. Managing the many dependencies can cause slowdowns. See how to achieve continuous delivery in the enterprise.
There is growing need for data-driven applications and the need for digital platforms to build these apps. In his session at 19th Cloud Expo, Muddu Sudhakar, VP and GM of Security & IoT at Splunk, will cover different PaaS solutions and Big Data platforms that are available to build applications. In addition, AI and machine learning are creating new requirements that developers need in the building of next-gen apps. The next-generation digital platforms have some of the past platform needs a...
SYS-CON Events announced today Telecom Reseller has been named “Media Sponsor” of SYS-CON's 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Telecom Reseller reports on Unified Communications, UCaaS, BPaaS for enterprise and SMBs. They report extensively on both customer premises based solutions such as IP-PBX as well as cloud based and hosted platforms.
DevOps at Cloud Expo – being held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA – announces that its Call for Papers is open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's largest enterprises – and delivering real results. Am...
I wanted to gather all of my Internet of Things (IOT) blogs into a single blog (that I could later use with my University of San Francisco (USF) Big Data “MBA” course). However as I started to pull these blogs together, I realized that my IOT discussion lacked a vision; it lacked an end point towards which an organization could drive their IOT envisioning, proof of value, app dev, data engineering and data science efforts. And I think that the IOT end point is really quite simple…
Internet of @ThingsExpo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - comp...
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
SYS-CON Events announced today that eCube Systems, a leading provider of middleware modernization, integration, and management solutions, will exhibit at @DevOpsSummit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. eCube Systems offers a family of middleware evolution products and services that maximize return on technology investment by leveraging existing technical equity to meet evolving business needs. ...
StarNet Communications Corp has announced the addition of three Secure Remote Desktop modules to its flagship X-Win32 PC X server. The new modules enable X-Win32 to safely tunnel the remote desktops from Linux and Unix servers to the user’s PC over encrypted SSH. Traditionally, users of PC X servers deploy the XDMCP protocol to display remote desktop environments such as the Gnome and KDE desktops on Linux servers and the CDE environment on Solaris Unix machines. XDMCP is used primarily on comp...
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, 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 opportuni...
DevOps at Cloud Expo, taking place Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 19th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long dev...
Aspose.Total for .NET is the most complete package of all file format APIs for .NET as offered by Aspose. It empowers developers to create, edit, render, print and convert between a wide range of popular document formats within any .NET, C#, ASP.NET and VB.NET applications. Aspose compiles all .NET APIs on a daily basis to ensure that it contains the most up to date versions of each of Aspose .NET APIs. If a new .NET API or a new version of existing APIs is released during the subscription peri...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
SYS-CON Events announced today that StarNet Communications will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. StarNet Communications’ FastX is the industry first cloud-based remote X Windows emulator. Using standard Web browsers (FireFox, Chrome, Safari, etc.) users from around the world gain highly secure access to applications and data hosted on Linux-based servers in a central data center. ...
SYS-CON Events announced today that Hitrons Solutions will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Hitrons Solutions Inc. is distributor in the North American market for unique products and services of small and medium-size businesses, including cloud services and solutions, SEO marketing platforms, and mobile applications.