When it comes to mergers and acquisitions in the technology industry, deal quantity has given way to quality — or, at least, to deal size.
According to Pricewaterhouse Coopers‘ latest US technology M&A Insights report for the second quarter of 2012, M&A deal transaction volume decreased by 15 percent on a quarter-over-quarter basis from the first quarter of 2012, from 65 deals in Q1 to 55 deals in Q2. But the value of cumulative transactions actually increased by eight percent quarter over quarter, to $31.8 billion.
On a year-over-year basis, the deal transaction slowdown is even more apparent: Q2 2012 showed a 35 percent decrease on a volume basis from the 85 M&A tech M&A transactions that occurred in the second quarter of 2011. But in terms of deal value, things actually have grown — Q2 2011 deal value added up to $26.8 billion, compared to the $31.8 billion that Q2 2012’s deals comprised.
This switch is because, according to PwC, “the busiest technology acquirers have switched gears to focus on integrating large acquisitions that closed in the last four quarters, and to potentially shed non-core assets in coming months.” So it seems that the M&A volume slowdown could only increase in the days ahead.
Meanwhile, tech industry IPOs saw a bit of a pullback in the second quarter of 2012 — there were 10 listings in Q2, compares to 13 listings in Q1. But despite what seems like a slowdown for tech, this was actually a glimmer of hope compared to the rest of the economy: Tech IPOs led all other industries in both volume and value during the second quarter of 2012, according to PwC.
But this IPO sluggishness may only lead to more M&A activity, according to Rob Fisher, who heads up transaction services for PwC’s U.S. technology industry segment. “The potential impact of a prolonged slowdown in IPO activity may further boost deal activity as former IPO candidates instead consider the M&A route,” he said in a statement issued by PwC along with its latest report.
In short: big companies may be getting their checkbooks ready, but public market investors may be having to wait a bit longer before they see another Facebook-esque coming out party from Internet stars.