Contact: Ben Kolada
The extra business day in February did little to prop up tech M&A volume, as the number of deals announced last month dropped to one of the lowest levels seen in the past year. The 257 tech acquisitions we recorded in February was one-third less than January’s total and 17% less than the trailing 12-month average. Although it’s impossible to predict the volume and value of tech acquisitions, one explanation is the somewhat seasonality of the business. In eight of the past 10 years, we saw a rise in sequential January deal volume followed by a dip in February volume.
Even total spending came in below the annual average. While the total amount spent on tech acquisitions in February ($10bn) was more than double what we recorded in January, it was still about half the average of the trailing 12 months. However, February wasn’t a complete wash. On a positive note, many of the largest technology companies were active in M&A last month: Akamai picked up small front-end optimization startup Blaze Software, Apple bought Chomp, Cisco acquired Lightwire, its largest deal since Starent Networks in 2009, F5 Networks reached for Traffix Systems and Quest Software scooped up BlueFolder. Further, we recorded four billion-dollar transactions in February, compared with none the previous month.
Still, the sharp downturn in volume marks a stark contrast to what’s been happening in the equity markets. Last month, we wrote that behavior in the stock markets is one of the main influencers on big-ticket M&A, and that big-ticket deals set the tone for overall dealmaking. But while the Nasdaq composite index continued its steady rise, reaching its highest point since the stock market crashed in the early 2000s, tech M&A volume in February moved in the opposite direction.