A summer holiday for tech M&A

by Brenon Daly

The summer holiday came early to the tech M&A market. Dealmakers around the globe announced nearly 15% fewer tech and telecom acquisitions in Q2 than in recent quarters, according to¬†451 Research’s M&A KnowledgeBase. And they didn’t spend much on the deals that they did get done. Our data shows the aggregate value of tech transactions announced in the April-June period slumped to the lowest quarterly level in a year and a half.

Altogether, the M&A KnowledgeBase shows Q2 spending of $113bn on just 815 tech deals. The slump in Q2 activity comes as strategic acquirers continue their extended hiatus in the market they once dominated. (According to our research, the number of tech transactions announced by corporate buyers has dropped almost uninterruptedly since mid-2015.) In the first six months of this year, for instance, tech bellwethers such as Oracle and IBM, which had averaged roughly one acquisition per month in their M&A heyday, have each put up just one print.

But now, add to that an uncharacteristic slowdown in Q2 tech deals by the other main buying group, private equity (PE) firms, which had been the sole ‘growth market’ in tech M&A recently. Buyout shops have doubled their number of tech acquisitions in the past five years, but in Q2, they posted a second consecutive quarterly decline in deal volume. Spending fell even sharper, with the value of PE deals in Q2 coming in at just half the level of the year-ago quarter.

451 Research will publish a full report early next week on Q2 M&A activity, including a look at prevailing pricing, active markets and the significant changes in how and where PE firms are shopping in tech.

Posted in M&A