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Tech Companies’ Appetite for Acquisition Increases

Tech acquisitions Busy Tech Buyers 75% of tech companies completed at least one M&A deal in 2014, and 81% are expected to initiate at least one M&A in 2015 while 11% anticipate pursuing 11 or more. Big Money One-half of survey respondents say the average enterprise value per acquisition will be $250 million or less, […]

Written By: Dennis McCafferty

Apr 21, 2015

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Tech acquisitions

Busy Tech Buyers

75% of tech companies completed at least one M&A deal in 2014, and 81% are expected to initiate at least one M&A in 2015 while 11% anticipate pursuing 11 or more.

Big Money

One-half of survey respondents say the average enterprise value per acquisition will be $250 million or less, and 46% indicate that it will be between $250 million and $999 million. Another 4% predict it will be at least $1 billion.

Winning Ways

54% said a top factor for a successful M&A is a well-executed integration plan, while 21% cited the correct valuation of a deal.

Enhancement Effort

Beyond increasing revenue or cutting costs, 50% said access to intellectual property and/or talent is a primary reason for future tech acquisitions. 42% said they’re seeking to “bolt on” or “tuck in” acquisitions to enhance new products.

Trendy Trio

54% said that mobile will be a key tech trend that drives M&A activity in 2015, while 48% cited the cloud and 47% data/analytics as key trends.

Deep Pockets

39% said an abundance of cash reserves will fuel deal activity this year.

Assessment Gap

67% said the valuation disparity between buyers and sellers will present major challenges in deal making this year, while 39% say the identification of suitable targets will.

Due Diligence

32% said their tech companies review their portfolios of business units, products and/or assets for potential acquisition targets on a monthly basis, and 27% do so quarterly.

Growth Strategies

Outside of M&A, 44% said their tech companies will focus on new product development to increase revenues and 22% will consider expanding geographically to do so.

Parting Sentiments

66% said the most preferred exit strategy for companies will be a sale to a strategic buyer and 11% said a preferred exit will be a sale to a financial buyer.

Tech Companies’ Appetite for Acquisition Increases

Dennis McCafferty

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