Technology mergers hit post-dotcom bubble record

Mergers and acquisitions in the technology sector reached the highest level since the dotcom bubble, a report by consultancy EY shows.

In the third quarter, the aggregate value of all deals for which value was disclosed hit $73.3 billion, a new record after the dotcom bubble that burst in the early part of the century.

Year to date, the total value of the deals has already exceeded last year’s value by 2%.

Mergers and acquisitions volume for the technology sector set a record for any quarter. It hit 923 deals, up 31% year to date.

EY says it is the third consecutive record for any quarter of the last 27 the consultancy has produced the reports.

In terms of confidence in the global recovery, executives in the technology sector are still optimistic, although slightly less so compared with previous quarters.

Tech Executives Confident in Economy

Executives are still optimistic about the economic outlook. Source: EY

EY experts note that “the rising sentiment is one of stability, a condition that allows companies to plan freely for growth and M&A.”

If confidence in the economy fell slightly, confidence in earnings has surged. More than four in five executives in the technology sector have a confident outlook on corporate earnings.

Executives confidence in the earnings outlook has surged. Source: EY

Executives confidence in the earnings outlook has surged. Source: EY

In the first half of this year, corporate earnings were very strong, especially in the US, where 70% of the companies in the S&P 500 beat estimates.

Confidence in credit and stock markets by executives in the technology sector is also higher. This bodes well for the outlook for mergers and acquisitions.

Hiring intentions are up since the second quarter, with 46% of executives in the technology sector saying they intend to increase their workforce, from 28% in the quarter ended in April; 48% said they would keep their workforce the same, while 6% plan to cut jobs.

Compared with the second quarter, executives’ concerns about increased global political instability surged, with 43% listing it as the biggest risk to their business from 32% previously.

The risk stemming from the tapering of the Federal Reserve’s quantitative easing programme is receding, in their opinion; only 22% of the executives nominated it as the main challenge for their business.

The number of those worried about the impact of the slow pace of reforms in the eurozone increased by three percentage points to 14%, while the percentage of those worried about slow growth in emerging markets has fallen sharply, to 13% from 27%.

Worries about inflation posing a risk are creeping up; 6% of executives say inflation is the main risk to their business, compared with 3% in the second quarter.

The number of executives worried about deflation stayed the same, at 2%.

@AntoniaOprita

1 thought on “Technology mergers hit post-dotcom bubble record

  1. Mergers and Acquisitions

    Mergers and acquisitions in the technology industry have become more prevalent recently as the industry develops and matures. Mergers and acquisitions is the process of consolidating or mixing two organizations into one corporation. A straight acquisition is simply when one organization buys another organization overall.

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