by Brenon Daly
After tech M&A spending in the first half of 2018 soared to the second-highest opening for any year since the recent recession, the second half of the year is starting even slightly stronger. In the just-completed month of July, acquirers around the globe announced tech purchases valued at $49bn, including 10 $1bn+ transactions, according to 451 Research’s M&A KnowledgeBase. Last month’s spending slightly topped the monthly average of the previous six months of $44bn.
Corporate acquirers once again led the robust tech M&A activity in July, continuing a recent resurgence after sitting out much of last year. The return of the big-name buyers came at the expense of rival financial acquirers, who had an uncharacteristically quiet July. Private equity (PE) spending last month slumped to its lowest level of 2018, while deal volume dropped to the second-lowest monthly total of the year.
Still, buyout barons are on pace for more tech acquisitions in 2018 than any year in history, with deal flow projected to top 1,000 prints. That would be nearly one-third of all tech transactions announced this year, twice the ‘market share’ buyout firms held at the beginning of the decade. Additionally, PE spending this year is tracking to roughly match the previous high-water mark of $134bn in 2015.
But in July, it was strategic buyers who once again set the tone in the overall tech M&A market. Corporate acquirers, who have seen their treasuries swell dramatically due to this year’s tax law changes, accounted for eight of 10 of last month’s deals valued at more than $1bn. Noteworthy prints by some of the tech industry’s brand names in July included:
The largest software acquisition in history (Broadcom’s $18.9bn reach for CA Technologies)
A significant geographic expansion for a European IT services giant (France’s Atos handing over $3.4bn for US-based Syntel)
An uncharacteristically rich divestiture by a reeling software behemoth (PE shop EQT Partners paying $2.5bn, or almost 8x trailing sales, to carve the SUSE business out of Micro Focus)
With July slightly accelerating the monthly spending average, 2018 is on pace for $540bn worth of transactions for the full year. That would represent the second-highest annual total in the M&A KnowledgeBase, which goes back to 2002. Closer at hand, this year is all but certain to snap a two-year slide in M&A spending. In fact, probably before August ends, the value of announced tech deals in 2018 will eclipse the value of transactions from all of last year.
