The Internet of Things (IoT) and data analytics are driving mergers and acquisition activity to new heights, as both tech and non-tech firms look to evolve their business models.
A Forbes article delved into the recent Ernst & Young (EY) report that examined M&A activity in the second quarter.
The EY report found that deal activity between April and June broke the all-time record for technology M&A valued at or above $1 billion. Aggregate value for Q2 reached just over $127 billion, nearly doubling the value from the previous quarter.
“The combination of digital disruption and slow organic growth drove Q2 2016 to near unprecedented deal-making levels for the technology sector overall,” according to the report’s authors. It added that many of the quarter’s 28 deals were driven by the emergence of IoT and data analytics, and the ensuing rush to capitalize on these burgeoning technologies.
With IoT-related M&A activity increasing by 28% compared to the same time period last year, the technology is proving to have strong momentum.
“…seven of the quarter’s eight connected car deals involved IoT technology (including mapping and tracking technologies). Six deals also targeted IoT security technology,” said the report.
The study included a mention of Brocade’s $1.5 billion acquisition of enterprise WiFi provider Ruckus Wireless, which is connected to the IoT space.
Big data analytics deals booming
Meanwhile, deal volume related to big data analytics increased 13% for the quarter compared to Q2 last year. EY attributed this growth to companies from many sectors recognizing the power of data to evolve and modernize their firms.
“Tech and non-tech companies alike pursued transformational deals, often to build broader end-to-end solutions in response to customer demand,” it said.
And EY sees the technology sector M&A frenzy continuing on into the future, as companies from all sectors seek out acquisitions to compete in a fast-evolving global marketplace.
“Because the technology industry is in such major transformation, we expect 2016 technology M&A to continue at a record or near-record pace for the foreseeable future, driven by the disruptive digital technologies that the industry is itself bringing to market,” said the report.”
“Tech companies will continue turning to M&A to accelerate their transformations and to build end-to-end solutions. Some will continue going private to manage their transformations away from public-market scrutiny,” said EY. “Non-tech companies will increasingly acquire tech, driving up cross-industry blur — and all will pursue security technologies.”