Global technology M&A for Q2 2014 aggregate deal value rose to USD 52.4 billion, a 57% year-on-year (YoY) increase, according to EY's Global technology M&A update.
In addition, 2H 2014 saw USD 119 billion in disclosed value, which was 70% higher than 2H13. However, compared to the first quarter of 2014, value declined 21% in Q2 2014.
Jeff Liu, Global Technology Industry Transaction Advisory Services Leader, Ernst & Young LLP, said, "Global technology M&A is on course for a blockbuster year in 2014. Technology companies are cash rich, and interest rates are low. Moreover, rapidly changing technology continues to create many new opportunities and so far in 2014, equity markets have remained resilient, exhibiting low volatility despite growing geopolitical unrest. That reinforces executives’ confidence in the global economy and, in M&A, makes it easier for buyers and sellers to' agree on valuations. Cloud/Software-as-a-Service (SaaS) and smart mobility continued to drive 2Q14 technology deal-making, together accounting for more than 42% of volume for the quarter."
The bigger story, however, is the continuing growth of payment and financial services technology, which experienced the highest average value among Q2 2014 deal-making trends. In volume, financial technology saw approximately 60 Q2 2014 deals, which was more than 50% higher than its 2013 quarterly average. In total value, financial technology registered USD 8.7 billion in Q2 2014, which was 141% higher than its 2013 quarterly average.
Deal volume in the second quarter rose by 39% YOY and 15% sequentially to 872 deals, setting a second consecutive new record for the 6.5 years since EY began producing these reports. This was the fourth consecutive quarterly volume increase. At 806 deals, corporate volume also experienced its fourth consecutive increase, up 17% sequentially and 41% YoY.
Private equity (PE) volume (66 deals) declined 6% (4 less deals) sequentially after five consecutive quarterly increases, but increased 16% YoY. Similarly, PE aggregate value fell well below recent levels. At USD 5.9 billion, it was down 55% sequentially and 58% YoY. Average value of PE deals was USD 266 million, down 41% sequentially and 58% YoY the lowest level in three years.
"Nothing less than a technology-induced reinvention of all industries has begun, moving toward 'sense and respond' relationships between businesses and their customers and driven by the five transformational technology megatrends: smart mobility, cloud computing, social networking, big data analytics and accelerated technology adaptation," says Liu.
"At the same time, macroeconomic conditions are supporting dealmaking with low interest rates, appealing lending terms and stability in equities markets. This confluence of factors will continue to drive record, or near-record, global technology M&A for the foreseeable future."
