Technology M&A Insights 2007

January 2007

PricewaterhouseCoopers Technology Insights provides an overview of M&A in the global technology sector during 2006 with analysis and comment on the market’s principal trends, driving forces and outlook for 2007.

2006 saw the return of strategic trade acquirers to the market with a vengeance as aggregate deal values broke though the €100bn barrier. Technology ‘mega-deals’ remained a key feature, with 18 €1bn-plus deals completed, but it is the mid-market that continues to be the real engine room of the technology M&A market and this shows no sign of losing momentum.

Looking ahead to 2007:

• Asia continues to rise in importance on the global technology M&A stage with India leading the charge. Indian acquirers are set to continue this lead and become even more prominent in European and North American transactions in 2007. China will slowly continue to exert more influence on transactions, both as a buyer and seller, but it is unlikely there will be a material shift in 2007.
• The Technology industry is on an environmental seesaw with increasing demand for more applications, mobility and computing power - which all drive increased energy consumption - on one side; and the ability for increasingly commercially viable and user friendly technology to be a key part of the solution to some of the key global environmental issues on the other.
• Traditional business models are increasingly coming under pressure from the delivery of ‘Software as a Service’ (“SaaS”), with a web-based subscription model. The challenges for traditional, smaller software players to adapt technologically, and to deal with the practical implications of revenue recognition and funding implications, are significant and will stimulate more M&A deals in 2007.