Tech sector’s M&A spree in 2016
The deals between Microsoft (MSFT) and LinkedIn (LNKD), Symantec (SYMC) and Blue Coat Systems, Salesforce (CRM) and Demandware, and Oracle (ORCL) and Netsuite were among the prominent acquisitions announced in 2016. And calendar 2016 marks the second year on record in which technology deals accounted for the majority of M&A deals. Prior to 2016, 2000 witnessed the highest number of deals in the tech sector, with M&A activity worth $289 billion.
Cash repatriation and M&As in the tech space
Industry analysts feel that President-elect Donald Trump’s cash repatriation proposals will likely help tech companies with significant cash parked abroad to continue their M&A (mergers and acquisitions) sprees in 2017.
Valuewalk has reported that Keith Weiss, a Morgan Stanley (MS) analyst, stated that in 2014, “software M&A deal volume surged 44% year-over-year following the last tax holiday on repatriated cash.”
Meanwhile, the AT&T-Time Warner deal worth $85 billion has yet to be approved because the merger is being perceived as giving too much power and concentration to AT&T. The deal has raised questions about the future of large acquisitions in the tech space. The Microsoft-LinkedIn deal faced similar allegations and objections by Salesforce. Regulators and antitrust authorities in the US and Europe (EFA) raised concerns, stating that the deal would curb competition.
Still, considering the pace of strategic acquisitions announced in the tech sector in 2016, it appears that M&A trend will likely to continue in 2017, with occasional hiccups.
Continue to the next part of this series to learn more about the factors that will likely drive the current M&A trend in the tech space going forward.