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Thanks to the megatrends in technology: social-mobile-cloud and ‘big data’ analytics, aggregate deal value of global technology mergers and acquisitions (M&A) surged 41% in 2011 -- even as the value of global M&A in all industries fell slightly amid economic uncertainty.

Aggregate deal value (for deals with disclosed values) reached US$167.7 billion in 2011 (up from US$119 billion in 2010), even though fourth quarter value declined sequentially and was up only seven percent year-on-year (YOY). Private equity (PE) deal values soared 67% during the year and bucked the trend of declining second-half growth, according to Ernst & Young’s “Global technology M&A update and 2011 review.”

The total volume of announced 2011 deals was 3,006 (counting both disclosed- and undisclosed-value deals), up 13% from 2,658 in 2010. However, fourth-quarter volume declined for the third consecutive quarter, to 676 deals (down four percent YOY, 11% sequentially and 15% since peaking in the Q1 2011 at 794 deals). Q4 2011 volume was the lowest quarterly total since the second quarter of 2010, reflecting that global technology deal-making is not immune to the effects of the macroeconomic uncertainty that chilled M&A in other industries.

Joe Steger, global technology transaction advisory services leader at Ernst & Young, said: “The disruptive megatrends of social-mobile-cloud and ‘big data’ analytics have helped fuel a significant rise in global technology M&A activity since 2009, despite a slight pullback due to macroeconomic pressures in late 2011. The same pressures suggest we might be in for slow growth in 2012 -- but the long-term outlook for technology M&A remains strong due to ongoing disruptive technology innovation.”

The year’s notable deal-making patterns carry the clear imprint of five technology megatrends: smart mobility, cloud computing, social networking, “big data” analytics and cross-sector and cross-industry blur -- plus the increased information security needs that come with them all. Sub-trends within the megatrends depict the irresistible force of disruptive innovation, which is remaking the technology industry while enabling transformative change in other industries as well. 

Trends that have been developing for several quarters -- or in some cases, even years -- yielded a long string of multibillion-dollar deals in 2011. Thirty-four deals topped US$1 billion in 2011, including eight in the fourth quarter. Established companies made major consolidation plays and placed big bets on smart mobility (including Internet and mobile video), cloud computing and business intelligence and analytics. 

At the same time, a multitude of smaller deals demonstrated the strategic importance of certain technologies, especially social networking and security, but also healthcare information technology (HIT), online and mobile games and advertising or marketing technologies. There were 100-150 deals in each of these areas in 2011, including many deals that overlapped several of them.

Semiconductor consolidation also drove big-ticket deals. Five of the year’s top 10 M&A transactions, worth a combined US$21.2 billion, involved established semiconductor companies as both the buyer and target. Restructuring deals were announced in many other sectors, especially the communications equipment and computers, peripherals and electronics sectors.