M&A deals point to tech strength

Technology deals soared to US$119 billion in 2010, as the push for smart technology drove global M&A deal value and set the stage for a robust 2011, according to a recent report by Ernst & Young.

“Last year’s deals reflect the demand for smart everything,” says Karen Atkinson, partner and national technology industry leader with Ernst & Young. “We’re talking about smartphones, tablets and other mobile devices and infrastructure, but information security, cloud computing and social networking also spurred dozens, if not hundreds, of deals.

These trends are expected to continue driving technology M&A growth this year, she adds.

According to Ernst & Young’s global technology M&A update Canadian companies made 83 deals in 2010, up from 71 in 2009. Total global technology M&A deal numbers were up 41%, increasing to 2,658 deals from 1,886 in 2009. Full-year total M&A value was US$119 billion in 2010, a 26% increase compared with US$94.8 billion in 2009.

Disclosed value of private equity deals more than doubled to US$19.7 billion in 2010.

There were 26 deals above the US$1 billion mark and a whopping 216 deals above US$100 million in 2010, compared with 19 and 132, respectively, in 2009. Companies consistently acquired multiple small firms of related technology to take advantage of key technology trends and rapid innovation.

Cross-border deals grew to 34% of all deals, up from 31% in 2009, as companies looked to pursue growth via international expansion.

“Several other factors suggest 2011 will be another strong year for global technology M&A,” says Atkinson. “New waves of technology innovation around smart mobility, cloud computing and social networking, as well as growing stockpiles of cash on technology companies’ balance sheets, will continue to fuel deal activity in 2011.”

The full Ernst & Young report can be found at www.ey.com/ca/technology.