Tag: 2012

A continuing M&A recovery in 2011

Brenon Daly

Contact: Brenon Daly

The choppiness that was felt in the overall M&A market in 2011 also came through in the totals for the year. While the number of transactions hit a five-year high, spending on tech deals in 2011 didn’t necessarily keep pace. The total value of transactions announced last year around the globe rose 17% to $219bn. Still, the increase in 2011 represented the second straight year of higher M&A spending following the dramatic decline in the recession of 2008-2009. However, the total for 2011 is only about half the value of deals announced in the previous years of the tech bull market.

Overall, dealmaking in 2011 started slowly, but then dramatically picked up in late spring and early summer. But that rebound stalled as uncertainty around European stability pushed out acquisitions, or canceled them altogether. The concerns knocked M&A spending in November to the lowest monthly level seen since the depths of the recession in February 2009. And while spending did rebound in December to a more typical level of nearly $20bn, the final few months of 2011 were hardly a robust time for significant transactions. Just one of the 10 largest deals of last year was announced in the final quarter of 2011.

Survey says: Tech M&A is likely to pick up in 2012

Brenon Daly

Contact: Brenon Daly

After a summer of discontent, the environment for tech M&A in the coming year once again appears welcoming, according to 451 Research’s annual survey of corporate development executives. More than half of the company dealmakers we surveyed indicated they expected to be busier in the coming year than they had been in the previous one. The number who predicted an increase actually ticked up slightly to 56% this year from 52% in our previous survey.

Meanwhile, when we asked about the overall climate for M&A, three times the number of corporate development executives projected it would get better rather than worsen in the coming year (43% vs. 14%). The sentiment is slightly more bullish than the result last year, when actual M&A spending totals rose for the second straight year following the dramatic drop-off during the recession.

The robust outlook for dealmaking in 2012 is even more remarkable when we compare it with the results from a special ‘flash survey’ we sent out in early August. At that time, the equity markets were sliding to their lowest levels in a year as volatility hit its highest level since early 2009. (It was also the time when the US got its AAA credit rating clipped by Standard & Poor’s, a downgrade that had been largely unimaginable before the recession.) Back in August, just one-third (32%) of respondents indicated they would be busier in the back half of 2011 compared with the first half of the year. We’ll have a full report on the survey results – including the outlook for M&A valuations, as well as which deal got voted as the most significant one in 2011 – in tonight’s Daily 451.

Projected change in M&A activity

Period Increase Stay the same Decrease
December 2011 for 2012 56% 30% 14%
December 2010 for 2011 52% 41% 7%
December 2009 for 2010 68% 27% 5%
December 2008 for 2009 44% 33% 23%

Source: 451 Research Tech Corporate Development Outlook Survey