Tech M&A value reach heady dot-com heights

Second quarter's average M&A deal value of US$194 million is highest registered since first quarter of 2000 as global tech industry rides high on cloud computing, mobility and Internet, new report reveals.

The technology industry is seeing a continued upsurge in mergers and acquisition (M&A) deals with the second quarter registering the highest quarterly average deal value since the dot-com boom era, Ernst & Young reported.

Released Thursday, the report by the financial accounting and analysis firm revealed that the total value of disclosed M&A deals during 2011's second quarter hit US$52.1 billion, which is 92 percent higher than the previous quarter's US$27.1 billion. In addition, the second quarter's average deal value of US$194 million is the highest since the first quarter of 2000 during the dot-com boom, Ernst & Young noted.

This continued pace of activities is powered by industry consolidation and by ongoing, disruptive innovation in areas such as cloud computing, smart mobility, Internet and mobile video, smart grids and solar energy, the report noted.

"The high aggregate and average values of [this quarter's M&A] transactions--overcoming the quarter's increasing macroeconomic uncertainty, unrest in the Middle East and the after-effects of Japan's earthquake and tsunami--are testament to the power of the disruptive innovations and high level of confidence in the future held by many technology executives," said Joe Steger, global technology transaction advisory services leader at Ernst & Young, in a statement.

He added that innovations around smart mobility, cloud computing and social networking are now influencing the development of the entire global economy.

Cloud computing, in particular, continues to figure strongly as telecommunications network operators acquire datacenter operators specializing in cloud services for the second consecutive quarter, the report noted. In fact, a US$2.3 billion acquisition made it into the quarter's top 10 deals.

Momentum to continue
Ernst & Young is not expecting the first two quarter's M&A pace to slacken off as technology continues to influence the development of the entire global economy.

Moreover, IT companies continue to stockpile cash, which gives them the flexibility to act when strategic M&A opportunities come along, the report stated.

"The big question is whether deal-making will continue to overcome macroeconomic obstacles [such as geopolitical unrest and global debt issues] or take a pause in the second half of the year," Steger surmised.


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