- More than twice as many technology executives (58%) expect to pursue acquisitions this year
- Confidence is evident in technology executives' expectations for continued growth in the global economy, corporate earnings and technology M&A
- New mobile, cloud and data technologies create challenges related to innovative disruption and cybersecurity
In the wake of record-setting first quarter mergers and acquisitions (M&A), technology executives expressed confidence that global digital transformation will continue to drive M&A in the sector through 2015, in EY's latest Global Capital Confidence Barometer — Technology. This bi-annual survey gauged the corporate confidence and acquisition plans of more than 1,600 global executives, including 197 technology executives. The survey also revealed that deal-makers are confronting two of the biggest challenges that have arisen from the explosion of mobile, cloud and data technologies: innovative disruption
and cybersecurity.
The percentage of technology executives expecting to pursue acquisitions has more than doubled to 58% over the past year. More than three quarters (78%) of those doing deals are planning acquisitions that would shift the scope of their business – a trend that has translated into deals that have blurred the boundaries between tech and other industries as they pursue disruptive innovations such as health care IT, the internet of things, big data analytics, mobile payments and cybersecurity.
Executives are increasingly optimistic about the global economy, with much broader consistency across geographies than in 2014, according to the survey. This economic optimism, combined with confidence in corporate earnings and other leading market indicators, is fostering an environment where companies are preparing bolder moves, including M&A, to generate
future value.
Overall, technology executives have 26% more deals in their pipelines now than in April 2014. More than half of technology executives (57%) expect to complete more acquisitions this year than in the previous year. That is no small feat, considering the 3,500 disclosed-value technology deals in 2014 and the 981 in 1Q15 — both post-dotcom-bubble records reported in EY's recently published Global technology M&A update report.
Jeff Liu, Global Technology Industry Leader, Transaction Advisory Services at EY, says:
"The continued 'blur' between tech and non-tech M&A is pushing technology deal-making up
to new levels. Whatever the drivers — wherever the opportunities — the technology sector produced more deals than any other sector in 2014, by our calculations. In this Barometer, it shows no sign of stopping anytime soon."
Other key highlights:
79% of technology executives now see the global economy as improving, putting behind them a trend toward more moderate expectations over the previous 18 months
95% of technology executives are planning to maintain or grow their workforce
Even though technology executives' corporate earnings sentiment has faded from a high in October 2014, over two-thirds of them (67%) still expect an improvement
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