Feast or famine for tech M&A

Contact: Brenon Daly

It was feast or famine for tech dealmakers in the first three months of the year. In the first half of the just-completed Q1, M&A spending surged to record levels, driven primarily by the two blockbuster deals announced so far this year: the proposed $24.4bn leveraged buyout of Dell and Liberty Global’s $16bn reach for UK communications provider Virgin Media Group. (Collectively, those two transactions basically equal the typical spending level for a full quarter in 2012.)

But after those early February acquisitions hit the tape, deal flow dried up dramatically. That was particularly true at the top end of the market. In the back half of Q1, we tallied only two transactions valued at more than $1bn, compared with eight 10-digit deals in the first half of Q1.

Overall, the mixed market saw the buyers spend $63bn on 768 deals in the January-March period. That essentially matched the spending from the final quarter of last year, as well as the two summer quarters in 2011. But unlike those earlier periods, Q1 deal value was dominated by the two transactions, which accounted for nearly two-thirds of the total quarterly spending.

In addition to the spending concentration, we would note another sign of weakness during the period. The 768 deals announced in Q1 represents a 16% decline from the same quarter in both 2012 and 2011. In fact, Q1 deal volume slumped to its lowest total since Q3 2009.

2013 activity, month by month

Period Deal volume Deal value % change in spending vs. same month, 2012
March 2013 219 $4.4bn Down 76%
February 2013 246 $47.6bn Up 296%
January 2013 303 $10.7bn Up 155%

Source: The 451 M&A KnowledgeBase

For more real-time information on tech M&A, follow us on Twitter @451TechMnA.