Tech MA Spending Increases 17% in 2011 as Number of Transactions Hits a Five-Year High

Led by multibillion-dollar strategic deals from Hewlett
Packard (NYSE: HPQ) Google (NASDAQ:GOOG), Microsoft (NASDAQ: MSFT),
SAP (NYSE:SAP), Texas Instruments (NYSE:TXN) and others, technology
acquirers increased MA spending for the second year in a row in
2012. Acquirers spent $219bn to purchase 3,690 information
technology, telecommunications and Internet companies around the
world last year, a 17% increase in spending and a 13% increase in
number of deals from 2010. The total deal count hit its highest
level since 2006, as MA activity continues to dig out from its
downturn in the recession of 2008-2009. The data, released today,
is available to subscribers of 451 Researchs MA KnowledgeBase. The
fact that deal-makers managed to generate an increase in spending
last year is remarkable given the turmoil that has shaken the
financial markets since summer," said Brenon Daly, Research
Director for MA at 451 Research. Daly noted that just two of the 10
largest deals of 2011 came in the final four months of the year,
when concerns about Europes debt crisis reached their highest
point. Much of the increase in activity in 2011 can be explained by
growth in acquisitions outside of North America as US buyers
increased their cash outlays for international targets. MA spending
on non-North American targets increased 48% year-over-year while
the number of deals increased 28%. Private equity firms did little
to contribute to the increase in spending. While the total number
of private equity-sponsored transactions increased by 44% in 2012,
their total outlays increased only seven percent from the
prior-year level, accounting for 14% of the past years tech
spending, a couple of percentage points less than financial buyers
represented in 2010. In fact, there wasnt a single private equity
transaction among the 10 largest deals of 2011 the first time that
has happened since 2008. Among the significant transactions of the
past year: -Google, looking to bolster its mobile business through
both hardware and patents, paid $12.5bn for Motorola Mobility,
spending more than it has spent, collectively, on the more than 100
deals it had announced up to the point. - In early December, SAP
inked the largest software-as-a-service transaction ever, spending
$3.65bn to acquire human capital management software vendor
SuccessFactors (NASDAQ:SFSF). -Hewlett-Packard, looking to
jumpstart its software business, paid a startlingly high premium to
take home British information management vendor Autonomy. The
$11.7bn price tag represents the largest software deal in seven
years, but also contributed to the ouster of the architect of the
deal (Leo Apotheker) after less than a year as HPs chief executive.
- Texas Instrumentss $6.5bn acquisition of National Instruments
(NYSE: NSM) stands as the largest semiconductor deal yet by a
strategic buyer. - Microsofts $8.5bn purchase of Skype marked the
software giants largest acquisition. - And a tech consortiums
purchase of Nortel patents for $4.5bn underscored the growing
importance of having legal defense of IP, particularly in the
rapidly emerging wireless sector. More growth expected for 2012
Tech MA professionals expect deal growth to continue in 2012,
according to recent surveys of MA professionals by 451 Research. In
the surveys, completed in early December, 56% of corporate
acquirers and 67% of senior investment bankers said they expect to
see an increase in technology MA this year. Further, when asked
about the overall climate for MA in 2012, three times the number of
corporate development executives projected that it would get better
rather than worsen (43% vs. 14%). That said, financial crises in
both Europe and the U.S. will weigh heavily on MA. Two-thirds of
the corporate buyers said tech MA would likely pick up if European
leaders could make 'meaningful progress' in their debt crisis.
Without a doubt, the on-going economic turbulence in Europe is
creating a number of headwinds for deal-makers right now, said 451
Research's Daly. To get a deal done, buyers need both currency and
confidence. While most tech companies have record levels of cash to
spend, the outlook for the companies they can spend it on is fairly
murky. Thats causing some buyers to hold off on acquisitions. And
so far, European leaders have done precious little to restore
confidence, much less resolve the crisis. Notes: Tech MA spending
totals from 451 Research are based on announced transactions, and
include both officially announced deal values and our analysts
proprietary deal-value estimates for key transactions across core
IT, telecommunications, Internet and IT services categories
globally. The surveys, completed by 451 Research in the first week
of December, 2011, drew responses from 112 technology corporate
development executives and from 130 senior technology investment
bankers. For additional information on 451 Research, survey results
and the 451 MA KnowledgeBase, go to: www.the451research.com. About
451 Research 451 Research, a division of The 451 Group, is focused
on the business of enterprise IT innovation. The companys analysts
provide critical and timely insight into the competitive dynamics
of innovation in emerging technology segments. Business value is
delivered via daily concise and insightful published research,
periodic deeper-dive reports, data tools, market-sizing research,
analyst advisory, and conferences and events. Clients of the
company at vendor, investor, service-provider and end-user
organizations rely on 451 Researchs insight to support both
strategic and tactical decision-making. 451 Research is
headquartered in New York, with offices in key locations, including
San Francisco, Washington DC, London, Boston, Seattle and
Denver.