February 26, 2013 – Enterprise software and IT deals in cloud, social, mobility and advanced analytics are expected to attract the most attention again this year. But the focus of those mergers and acquisitions is narrowing, leading to fewer deals at lesser value compared with a few years ago, according to a new industry forecast from advisory PricewaterhouseCoopers.
The number of mergers and acquisitions were up slightly in 2012 compared with the previous year, but down in value by nearly 20 percent. PwC anticipates more of the same with transaction volume and value in 2013, though with refined areas of buyouts in the hyped areas of mobility, social networks and collaboration, cloud computing, and big data and advanced analytics.
- PwC anticipates that mobile IT and BI growth will continue this year “unabated.” With that comes the transformation of software product development, and app developers are targeted for widespread buyouts this year. In addition, PwC expects a consolidation the mobile payments and mobile “wallet” markets with rises in adoption this year.
- As more vendors bring offerings and storage into the cloud computing space, PwC states that virtualization capabilities will gain in importance. This, in turn, may bring more software-defined networks into play for deals and mergers.
- Big data, which PwC said “grew up” in 2012, will begin a move from an atypical differentiator to “the cost of doing business” in 2013. The advisory indicates that this will mean more rampant M&A activity through the year, though a lingering question mark exists on actual offerings and returns in the short-term.
- PwC forecasts interest and transactions to build out for social providers that are tapped into consumer-side offerings as well as those linked with location capabilities. “Always-connected mobile devices, continuously transmitting user information and location, make social/local capabilities, not to mention mobile advertising, key components of doing business. We expect continued innovation in the retail and consumer industries, social discovery applications and health care capabilities among many others.”
- Tech is getting better at delivering to specific businesses: “Increasingly, non-technology businesses are either being disrupted by new technology-based delivery models, or they are finding better ways to engage customers by using technology. Technology companies are acquiring industry vertical expertise to speak to these changes, and non-technology companies are acquiring capabilities, and in some cases technology companies themselves, to keep pace.”
PwC highlighted two other broad economic factors weighing on tech industry transactions. After about a decade of ramped-up industry consolidation, the firm expects a “significant surge” in divestitures to clear out dated holdings, with 75 percent of Fortune 1000 tech companies recently indicating to PwC that they intend to make some divestiture move in 2013. Concurrently, as macroeconomic factors are predicted to settle through the year, cross-border deals and investments – especially with Asian companies putting money into U.S. ventures – could see an uptick in 2013.