Tech M&A activity in 2012: Five things to know

Tech M&A activity in 2012: Five things to know

Summary: More than 2,000 private technology companies were acquired in 2012. Here's a look at the trends.

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CB Insights, the startup-focused American market research firm, has released a new report on how the mergers and acquisitions market in the global technology sector fared in 2012, and it's an interesting way to connect the dots on the year.

Five things to know:

  1. Exactly 2,277 private companies were acquired worldwide last year; Google and Facebook led the pack in scooping up promising smaller firms, with 12 apiece. A total of $46.8 billion was spent (and disclosed); the top third of those companies acquired represented 80 percent of the money spent.
  2. Bootstrapping is popular. Most -- 76 percent, in fact -- of the tech companies acquired in 2012 did not raise institutional investment (either venture capital or private equity) prior to acquisition. That means many tech startups are running on their own profits, financing or "angel" -- that's friends & family -- investment.
  3. It's a "long tail" market. Just 2.5 percent of all private tech acquisitions in 2012 were billion-dollar deals. In contrast, more than half of them were for less than $50 million. And an additional 30 percent were between $50 million and $200 million.
  4. In the U.S. and abroad, California is king. The West Coast state perenially leads the pack in number of deals and dollars spent, and that continued in 2012 with 455 deals. Its lead is so large that it tops the next five U.S. states on the list -- New York (138), Texas (91), Massachusetts (87), Illinois (54), and an unspecified fifth -- combined. But the action is more interesting downstream: New York and Texas surged ahead of Massachusetts this year.
  5. In the rest of the world, the U.K. is queen. Behind the U.S. comes the U.K., Canada and India, followed by Germany and France. (That's in terms of number of acquisitions.) CB Insights noted that Canada has shown particular "momentum" as of late.

 

Topics: Tech Industry, Start-Ups

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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2 comments
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  • Re: It's a "long tail" market

    Or, to put it another way, the lion's share of the world's economic productivity comes from small firms, not big ones.
    ldo17
    • No, that's not quite right.

      My original sentence indicated that the lion's share of the number of deals -- that word, "number," is key here -- is small firms. In other words, there are many more small firms than there are larger firms. That doesn't speak to how much economic impact they have as a whole.

      Indeed, if you were to simply take the purchase price as a rough measure of "economic impact" -- and I wouldn't, but for the purpose of this example I will -- the billion-dollar companies (again, 2.5 percent of the whole; therefore $2.5 billion minimum) have the same impact as the entire bottom 50 percent of sub-$50 million companies (therefore $2.5 billion at most).

      So no, I wouldn't put it that way at all.
      andrew.nusca