There's a big slowdown in dealmaking in the global Technology, Media &Telecommunications (TTM) sector with the value dropping by $92 billion or nearly a quarter during the first nine months of this year reports Mergermarket.
There have been $299.5bn of deals compared with $391.1bn during the year ago period. The number of deals: 2,370 held steady.
The US has the largest market share at 43% of global deal value with 892 transactions worth $127.9bn including the largest deal of the year so far: The $14.4bn acquisition of Scripps By Discovery Communications.
Europe reported 813 deals valued at $47bn and is likely to end the year at a record low market share due to uncertainty from Brexit.
Elizabeth Lim, senior analyst at Mergermarket singled out Japanese giant Softbank in a "buying frenzy" acquiring a wide range of companies in AI, chips, and robotics. Softbank has acquired 26 companies so far this year - three times last year's investments.
She included a quote from Masayoshi Son, CEO of SoftBank:
"Every industry that mankind created will be redefined. The medical industry, automobile industry, the information industry of course. Every industry that mankind ever defined and created, even agriculture, will be redefined."
The top three deals in the global TTM sector for the first nine months of 2017:
- $14.4bn Discovery Communications acquiring Scripps Networks Interactive.
- $12.7bn Idea Cellular acquiring Vodafone India
- $10.6bn Bain Capital consortium acquiring Toshiba Memory stake.
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Foremski's Take: Fewer big deals means bad news for Wall Street bankers but more small deals is good news for Silicon Valley's startups because it means exits for the investors. And capital comes back in to go around again.
Fewer big deals could signify something else: there are few large target companies left that are worth acquiring. And will there be others to take their place? Startups are rarely able to grow larger than 100 people before being acquired.
There's another trend at work with a longer horizon: The tech industry is becoming the media industry as an example of how the transformation of all business into digital businesses means every industry is vulnerable to high tech large scale business platforms such as Google, Facebook, Amazon and maybe Apple.
If you are a top competitor in the bricks and mortar world, you would have to build stores and warehouses and expand into new geographies -- scaling takes years. In the digital world -- if you are the better competitor -- business scaling takes just days. And scale always wins.
The global digital transformation that is underway -- of all businesses across all industries -- leaves every company vulnerable to disruption from highly efficient business tech platforms. Take a look at the digitization of the media industry. It will be repeated in other industries. Deal flow value will shrink again.