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.
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