Tech Dealmakers Less Bullish on M&A Than They Were Six Months Ago
But the market is still strong, and the tech industry may be on track to reach record deal values in 2018, according to a Morrison & Foerster survey.
October 25, 2018 at 02:00 AM
3 minute read
Technology industry dealmakers are less optimistic about M&A work than they were back in April, according to a new Morrison & Foerster survey.
In the semi-annual Tech M&A Leaders' Survey, made public this week, only 43 percent of respondents said they expect to see more activity over the next year—a drop from the 66 percent who six months ago said they expected to see an increase.
The report found that 41 percent of survey respondents expect tech M&A to stabilize in the near future, and 16 percent expect to see a decline.
The “less bullish outlook” isn't surprising, according to the report, because the market is closing in on a new record.
“The market is still very strong, especially when you take into account that the tech industry is on track to finish near, if not over, the highest deal value we've seen since the dotcom crash,” said Eric McCrath, co-chair of Morrison & Foerster's corporate department, in a statement accompanying the report.
The value of tech companies that changed hands through the first quarter of the year was $425 billion, according to 451 Research, a company that provides IT industry research and analysis. At that rate, the total value of deals in 2018 could exceed the previous record, reached in 2015, of $575 billion.
The volume of tech M&A activity in recent years has set a high bar, which explains in part why dealmakers expect a change in the deal cycle, McCrath said.
The M&A Leaders' Survey, conducted by Morrison & Foerster and 451 Research, includes responses from 151 individuals—40 percent investment bankers and 38 percent C-level or M&A executives. Others are lawyers, venture capitalists, private equity professionals and others doing M&A work. About 85 of the respondents are from the United States, including 39 percent from the Silicon Valley.
More than half (54 percent) of survey respondents said they expect scrutiny from the Committee on Foreign Investment in the United States (CFIUS), as well as trade disputes, to put a damper on tech M&A over the next year. But just 34 percent expect antitrust issues to negatively impact M&A activity—presumably because the Trump administration, which did not block AT&T's acquisition of Time Warner, is seen as less focused on antitrust matters.
The results of the survey were almost split in the view of M&A valuations, with 32 percent of respondents expecting a decrease in private company M&A valuations over the next year, while 30 percent forecast an increase.
A total of 79 percent of the respondents expect to see an increase in sales of private equity portfolio companies to strategic acquirers—a trend Morrison & Foerster said is bearing out, with 15 such purchases so far this year compared to 2017.
The survey suggests that buyers have a continued interest in companies in the machine-learning business, with 62 percent of respondents saying machine learning has been a bigger driver of M&A this year than in the past. On the flip side, 19 percent of the respondents found that cryptocurrency was the most “over-hyped technology” over the last 20 years.
The respondents note that in addition to M&A, tech companies benefit from a strong initial public offering market, and they predicted that 20 tech companies will go public over the next year.
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllTrending Stories
- 1Blank Rome Adds Life Sciences Trio From Reed Smith
- 2Divided State Supreme Court Clears the Way for Child Sexual Abuse Cases Against Church, Schools
- 3From Hospital Bed to Legal Insights: Lessons in Life, Law, and Lawyering
- 4‘Diminishing Returns’: Is the Superstar Supreme Court Lawyer Overvalued?
- 5LinkedIn Accused of Sharing LinkedIn Learning Video Data With Meta
Who Got The Work
J. Brugh Lower of Gibbons has entered an appearance for industrial equipment supplier Devco Corporation in a pending trademark infringement lawsuit. The suit, accusing the defendant of selling knock-off Graco products, was filed Dec. 18 in New Jersey District Court by Rivkin Radler on behalf of Graco Inc. and Graco Minnesota. The case, assigned to U.S. District Judge Zahid N. Quraishi, is 3:24-cv-11294, Graco Inc. et al v. Devco Corporation.
Who Got The Work
Rebecca Maller-Stein and Kent A. Yalowitz of Arnold & Porter Kaye Scholer have entered their appearances for Hanaco Venture Capital and its executives, Lior Prosor and David Frankel, in a pending securities lawsuit. The action, filed on Dec. 24 in New York Southern District Court by Zell, Aron & Co. on behalf of Goldeneye Advisors, accuses the defendants of negligently and fraudulently managing the plaintiff's $1 million investment. The case, assigned to U.S. District Judge Vernon S. Broderick, is 1:24-cv-09918, Goldeneye Advisors, LLC v. Hanaco Venture Capital, Ltd. et al.
Who Got The Work
Attorneys from A&O Shearman has stepped in as defense counsel for Toronto-Dominion Bank and other defendants in a pending securities class action. The suit, filed Dec. 11 in New York Southern District Court by Bleichmar Fonti & Auld, accuses the defendants of concealing the bank's 'pervasive' deficiencies in regards to its compliance with the Bank Secrecy Act and the quality of its anti-money laundering controls. The case, assigned to U.S. District Judge Arun Subramanian, is 1:24-cv-09445, Gonzalez v. The Toronto-Dominion Bank et al.
Who Got The Work
Crown Castle International, a Pennsylvania company providing shared communications infrastructure, has turned to Luke D. Wolf of Gordon Rees Scully Mansukhani to fend off a pending breach-of-contract lawsuit. The court action, filed Nov. 25 in Michigan Eastern District Court by Hooper Hathaway PC on behalf of The Town Residences LLC, accuses Crown Castle of failing to transfer approximately $30,000 in utility payments from T-Mobile in breach of a roof-top lease and assignment agreement. The case, assigned to U.S. District Judge Susan K. Declercq, is 2:24-cv-13131, The Town Residences LLC v. T-Mobile US, Inc. et al.
Who Got The Work
Wilfred P. Coronato and Daniel M. Schwartz of McCarter & English have stepped in as defense counsel to Electrolux Home Products Inc. in a pending product liability lawsuit. The court action, filed Nov. 26 in New York Eastern District Court by Poulos Lopiccolo PC and Nagel Rice LLP on behalf of David Stern, alleges that the defendant's refrigerators’ drawers and shelving repeatedly break and fall apart within months after purchase. The case, assigned to U.S. District Judge Joan M. Azrack, is 2:24-cv-08204, Stern v. Electrolux Home Products, Inc.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250