PE dealmaking in the technology is soaring, according to EY’s global technology update for the second quarter of 2013. Overall the report shows a mixed picture because corporate dealmaking continued a three-quarter-long slide.
According to EY’s Global technology M&A update: April–June 2013, there will be radual growth for technology M&A volume and value for the rest of 2013 based on PE strength. According to the report, technology is slightly different than the overall M&A trend for all industries which look to be undergoing a fundamental reset to a lower level of long-term activity.
PE’s strength appears to come from a combination of factors, says EY. Some technology targets’ valuations have been weakened by slow innovation in products, enabling activist shareholders to take positions in the stock.
Another factor is ease of financing at low interest rates; and the pursuit of value-creation opportunities through operational improvements that may not be as attractive a rationale for corporate buyers PE and non-technology buyers together accounted for 54% of Q213 quarterly aggregate value, dominating every other sector but one into net seller positions.