Friday, February 15, 2013

8 Fast Facts About Tech M&A In 2012 | Technology | Minyanville's ...

Last year was a big one for technology news, with Facebook's (NASDAQ:FB) botched IPO and its purchase of Instagram, the legal battles over patents between Apple (NASDAQ:AAPL) and Samsung (PINK:SSNLF), Apple and Google's (NASDAQ:GOOG) foray into making hardware, and all kinds of records for Twitter, to name only a few.

While the big companies made headlines, smaller, private companies had a more quietly successful year. In 2012, a total of 2,277 private technology companies were acquired, representing a 20.2% increase from 1,895 purchased in 2011. A recent report from CB Insights details 2012's technology M&A activity, revealing some interesting trends (also see their year-on-year comparison with 2011, published today).

1. California was the runaway leader -- of course.
First, a pretty obvious conclusion: California led the USA with 455 private tech companies acquired, more than the number acquired by all of the next five states on the list combined. New York claimed a solid second place with 138 acquisitions, while Massachusetts, which is generally regarded as being third in the nation for tech companies, was edged out by Texas with 91 deals to Massachusetts' 87. In all, 49 of the 50 states has acquisitions...it just wasn't South Dakota's year.

2. India took third internationally; Canada placed second.?
In international markets (excluding the United States), the UK led with 156 private tech companies acquired, followed by Canada with 100. The biggest news in the international markets is that third place goes to India, where tech is booming.

3. Facebook and Google tied among companies making purchases.
Facebook and Google led the pack with most acquisitions, with both companies weighing in at 12 each. Rounding out the top five were Cisco (NASDAQ:CSCO) with 11, Groupon (NASDAQ:GRPN) with 10, and Twitter, Oracle (NASDAQ:ORCL), and Avnet (NYSE:AVT) tied with nine. Amongst considerable competition, Avnet was the biggest surprise on the list, with a string of small acquisitions.

4. Institutional investors mostly left out.
Of all acquired companies, 76% did not raise any institutional investment prior to acquisition. Between reinvesting their own profits and angel investors, the majority of companies did not need institutional investment to grow. This speaks to the amount of energy and activity in tech startups these days.

5. Very few deals broke the billion-dollar mark.
Among the companies that disclosed the valuations of their deals, only eight firms were acquired for $1 billion or more, with the overwhelming majority of companies, 176, falling below $50 million in valuation. On average, companies raised $25.4 million and were acquired for $172 million.

6. The Web and Mobile Commerce category was most active
The top industry subsector was Web and Mobile Commerce, with 173 acquisitions, followed by Advertising Sales and Marketing with 131. A full 15 ?tech industries had 30 acquisitions or more.

7. Most diverse collection of buys?
Texas came out with the most diversified set of acquisitions amongst the subsectors of Computer Hardware and Services, Electronics, Internet, Mobile & Telecommunications, and Software. New York had the highest percentage of Internet companies being acquired.

8. Most buys were strategic.
94% of acquisitions were made by strategic buyers and not financial sponsors. None of the top five states had more than 10% of acquisitions from private equity firms.

Also see:

8 Sweetheart CEOs: More Cash for Shareholders, But...

With Surface, Microsoft Stands Little Chance of Competing With Apple in the iPad Market

No positions in stocks mentioned.

Source: http://www.minyanville.com/sectors/technology/articles/8-Fast-Facts-About-Tech-M2526A/2/15/2013/id/48139

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