A vacation from M&A in August

Contact: Brenon Daly

Tech M&A slowed dramatically in August, plummeting to just one-quarter the amount registered in the same month last year and half the level of two years ago. With a total deal value of just $10.3bn, spending on tech transactions around the globe in August fell to its second-lowest monthly total of the year.

The weak August activity – coming as the Nasdaq Index moved consistently higher all month, ending with a 4.3% gain – continues the sluggish spending that we have seen throughout 2012. The value of announced deals has now dropped in six of the eight months so far this year. We would add that the falloff in August ($10.3bn worth of transactions in the just-completed month, down a whopping 74% from August 2011) was the sharpest of any month in 2012.

Buyers announced just two acquisitions valued at more than $1bn in August, down from five in July and an average of about three in the first half of 2012. The big-ticket purchases: The Carlyle Group’s $3.3bn acquisition of Getty Images and IBM’s $1.3bn reach for HCM vendor Kenexa.

Finally, we would note that private equity (PE) firms were unusually active in August. The Getty Images deal, which had PE firms on both sides of it, stands as the largest transaction of the month and the third-largest so far in 2012. Other PE deals last month included Thoma Bravo taking home Deltek, which was majority owned by a buyout firm; Trimble Navigation acquiring PE-backed TMW Systems; a secondary transaction for UC4 Software; and the pairing of two buyout-backed consolidators, with CDC Software rolling up Consona.

2012 monthly activity

Month Deal volume Deal value % change in spending vs. same month, 2011
January 340 $4.1bn Down 65%
February 266 $10.4bn Up 16%
March 292 $16.8bn Down 30%
April 277 $14.1bn Down 47%
May 310 $15.6bn Down 47%
June 298 $13.3bn Down 20%
July 336 $20.5bn Up 49%
August 276 $10.3bn Down 74%

Source: The 451 M&A KnowledgeBase

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