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2015 H1 Technology M&A News Brief

July 10, 2015

Hello from Woodbridge International, the leader in global middle-market M&A.

Welcome to our 2015 H1 technology M&A news brief, in which we discuss some of the recent deals in the market as well as the current trends:

  • Mega-Deals Continue: Some of the major tech deals in 2015 so far are:
    • Intel-Altera $16.7 billion
    • Avago-Broadcom $37 billion
    • Verizon-AOL $4.3 billion
    • Equinix-Telecity $3.6 billion
    • Nokia-Alcatel Lucent $16.6 billion
    • NXP-Freescale $16.7 billion
  • Large Cash Reserves, Low Debt, Low Interest Rates, and Strong Stock Prices will help drive M&A. Qualcomm, for example, has $16B of cash (60% of annual revenue). Consolidation plays may continue, as competitors see the need to bulk up as well as expand product breadth. On the down side, slow growth in Europe and China, as well as a strong dollar, may be headwinds for US-based M&A
  • Valuation Gap: In a recent survey by KPMG, 67% of technology M&A professionals replied that a difference in valuation was the main cause for deals to not be completed. That being said, 80% expected to complete a deal in 2015. Valuations are at the strongest since 2007, and sellers are getting a lot of attention.
  • IoT a Strong Sector for Growth: According to a recent McKinsey paper, the IoT market could climb to $11 trillion by 2025, or around 10% of global GDP. Most of that value will be in B2B applications and the analysis of data. For example, on many applications, none or very little of the data acquired through sensors is currently analyzed. Companies wishing to get into the space, or to improve their position, will look to grab IP and technical staff through acquisitions.
  • 2015 Outlook Favorable. Technology M&A was up 80% over the same period in 2014, and total US M&A activity was at $1 trillion, the highest level for a first half since records began in 1980. Slow US economic growth of 0-2% means that companies need to use their cash hoards on acquisitions in order to show top-end growth.

Woodbridge Group (www.woodbridgegrp.com) provides sell-side mergers and acquisitions services to businesses in all sectors with $5 million-$100 million in transaction value. The firm operates from multiple locations in North America, Europe, Latin America and Asia. Please contact us to discuss in more detail.

Tom Kastner
Senior M&A Advisor