If you are a company immersed in SMAC solutions -- social, mobile, analytics and cloud -- you're an appealing acquisition target, a new analysis shows.
According to EY’s latest Global Technology M&A Update, the first quarter in 2014 saw record growth driving what the consultancy calls "astonishing M&A activity" in the technology sector.
How astonishing? Apparently to levels not seen since before the 2008-09 financial breakdown, EY suggests. For example, aggregate value of all disclosed-value deals is highest in 14 years for a first quarter, at $66.6 billion, up 83% year-over-year and 41% sequentially. That's a 15% increase in volume, totaling 758 deals -- "the highest level we’ve seen in six years," according to EY.
In fact, the first quarter of 2014 showed just how great of a time it is to be involved in SMAC technology. EY reports that mobile apps dominated 1Q’14, especially in value terms, while Internet companies purchased nearly half of 1Q’14 aggregate value. Big data analytics was a mainstay in deals with marketing technology or social network targets. In addition, cloud/SaaS, security, financial services and mobile video game technologies were targeted in dozens of 1Q’14 deals.
The need kid on the block -- the Internet of Things -- is also gaining traction as a driver of M&A deals, EY reports, noting how "Google’s $3.2 billion acquisition of Nest Labs is the second multibillion-dollar deal in six months that envisions IoT’s rapid approach and significant impact. (The first was Koch Industries, Inc.’s $7.2 billion deal for Molex Inc., which makes a wide variety of sensors and other electronic components used in mobile devices.)"
The Nest acquisition is also just as much about big data as it is sensors in the IoT, EY observes. A national network of devices will, over time, will become smarter.
Speaking of big data, EY notes that many 1Q14 deals included important big data angles. "We counted roughly five dozen in all, but only a few targeted core big data analytics technology." For example, in a $150 million deal, IBM acquired Cloudant, Inc., which offers a version of the open-source database NoSQL, but provided as a service. Also on EY's radar was Intel's investment (for an undisclosed amount) in Cloudera, Inc., a provider of the open-source Hadoop database.
A great deal of activity in the virtualization and SaaS space caught EY's attention. Top among this activity was VMware's $1.5 billion deal in 1Q14 to acquire AirWatch, following two smaller 4Q13 deals for mobile device management software/SaaS in which IBM and Oracle Corporation were the buyers. "The deal, VMware’s biggest, envisions virtualizing employee workspaces, as well as providing enterprise tools for seamlessly managing company- and employee-owned mobile devices," the report notes.
API management is another piece of the VMware–AirWatch deal, with technology companies competing "for developer attention to build ecosystems around their technology platforms." AirWatch builds its device management systems around APIs, including Apple, Inc.’s APIs.