Experts predict slow increase in technology sector takeovers

Despite a quiet start to the year, merger and acquisition (M&A) activity in the global technology sector is set to surpass that of 2011, an American-based technology analyst company predicts.

In 2011 $219 billion was spent globally on some 3,700 transactions, according to 451 Research.

This represents a 50% jump in spending from the recession-hit 2009, although it remains some way short of the levels seen in the boom years of 2006/07 when tech M&A deals hit a peak of $457 billion.

The two biggest transactions of 2011 were Google paying $12.5 billion for Motorola Mobility and Hewlett Packard’s $11.6 billion purchase of the British-based information management vendor, Autonomy.

Brendon Daly, an analyst at 451 Research, says spending in January and February this year has been slow, although he forecasts this to rise in the second half of 2012.

“Activity in the first half is likely to remain muted with there being little impetus for buying, especially heading into the election,” says Daly.

“Lots of deals were done last summer when people were confident, [but] this is not the case now. However we do expect a pick-up in the second half of the year, which will be discernable.”

Indeed, in an annual survey of the tech M&A landscape, key members told 451 Research they expect a busier year in 2012 than last year.

This, Daly adds, would extend the recovery in M&A to its third straight year after bottoming at $147 billion in 2009.

“In our annual survey, more than half (56%) of the corporate development executives projected in December that they would be doing more deals this year than last year, compared with just one out of seven (14%) respondents who indicated they would be doing fewer,” Daly says.

Having peaked at $71 billion in the second quarter of 2011, M&A deals tailed off to just $38 billion in the fourth quarter.

Daly says this was the result of the increased stockmarket volatility, which will lead to several deals being pulled.

Daly was speaking at a Neptune event in San Francisco.