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Tech M/A Leaders Less Bullish on Deal Activity Expectations, MoFo Survey Finds.

MANews-(C)2009-2016

12 May 2016 - US-based law firm Morrison and Foerster's semiannual mergers and acquisition leaders survey finds that more dealmakers still expect M/A activity to increase during the next six months (38%) than those who forecast a decrease (33%), the firm said.

However, the result is a significant departure from the bullish survey findings from a year ago when 61% of respondents predicted growth in dealmaking, and only 9% expected a decline.

The survey results come on the back of the aggregate value of tech, media, and telecom deals in 2015 topping USD 600bn, reflecting the highest level of spending since 2000 and more than 80 separate tech transactions valued at USD 1bn or more, according to 451 Research's M/A KnowledgeBase.

While deal volume has remained consistent year over year through the first quarter of 2016, values have decreased.

In 1Q15, there were 1,040 deals with an aggregate total of USD 121bn, while 1Q16 saw 1,029 deals worth an aggregate USD 73bn.

The survey a partnership between MoFo and tech market intelligence firm 451 Research now in its ninth edition examines significant developments in deal terms, as well as sentiment and trends in key technology markets across the US, and the most active countries and regions internationally.

The recent survey was conducted in April and had 121 participants, including C-suite executives (22%), corporate and business development executives (25%), investment banking and financial advisers (33%), general counsel and other in-house legal professionals (8%), and venture capital and private equity investors (6%), among others.

Nearly two-thirds of the dealmakers (64%) said private companies were likely to be sold for less during the remaining months of 2016 than they would have sold for in the same period last year.

The gulf between buyers and sellers expectations is significant. Three-quarters of respondents (76%) said valuations that acquirers have been willing to pay in the past half-year have come down, while only half (52 %) said target companies have lowered their valuation expectations.

More than half of the survey respondents (58%) expect the number of tech IPOs in 2016 to fall short of what happened in 2015, which was already the lowest level of activity since the last recession. Dealmakers expect an eventual rebound in IPOs, but not for several years.

Country: USA

Sector: IT/Online Services

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Type: Corporate Acquisition

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Comment: Tech mergers and acquisition leaders are decidedly less bullish this year than last, a new survey finds

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Publication:M & A Navigator
Date:May 12, 2016
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