A mature May for M&A

by Brenon Daly

After slumping to the lowest monthly total in four years in April, spending on tech M&A rebounded in May as consolidation in old-line industries set the pace last month. Overall, the value of tech and telecom transactions announced across the globe in the just-completed month tripled compared with April, hitting $46bn, according to 451 Research’s M&A KnowledgeBase. The resurgence pushed May to the second-highest monthly spending of 2019, slightly ahead of the previous four months’ average.

But among last month’s big prints, more than a few of the targets had a bit of grey hair, at least by the standards of the youth-obsessed tech industry. The companies that sold for more than $1bn in May were all more than a decade old, with our data indicating the average founding date for the targets going all the way back to 2000.

Looking specifically at May’s M&A activity, nearly half of the deal value came in a single transaction in the rapidly consolidating payments market. Global Payments handed over $21.2bn in stock for transaction-processing provider TSYS, which was founded in 1983 and had about 13,000 employees. Other big prints last month included the $8.25bn take-private of fiber-optic networking rollup Zayo Group and Hewlett Packard Enterprise’s $1.4bn consolidation of fellow supercomputing vendor Cray.

Billion-dollar deals were relatively rare last month, however. The M&A KnowledgeBase lists just seven tech transactions valued at over $1bn in May, and just 31 deals during the first five months of 2019 overall. For comparison, that’s one-third the number of big prints listed in the M&A KnowledgeBase at this point last year. The drop-off at the top end of the market is the main reason that 2019 is tracking to roughly $100bn, or nearly 20% less M&A spending this year compared with last year.

Posted in M&A