M&A for Tech and Tech Services Off to a Strong Start in 2018

M&A for Tech and Tech Services Off to a Strong Start in 2018

2018 mergers and acquisitions are off to a strong start for technology companies, including software, tech services, media and information. There were 516 transactions in Q1, down 7% from Q1 2017, but the value of the deals totaled $71.1 billion, 124% more than Q1 2017, according to The Jordan, Edmiston Group and 451 Research.

Tech-enabled services was particularly strong, with total deal value increasing 207% to $31.3 billion, in Q1 2018 vs Q1 2017. This was largely driven by the large acquisitions of AppDynamics, Novitex Enterprise Solutions, and SourceHOV.

Software continued to be a very active sector, with 146 transactions (a 32% increase) and deal value of $9.7 billion (up 38%). Two of the largest software deals were the acquisitions of Fortive (industrial automation and instrumentation) and LifeScan (healthcare).

The 2018 economic outlook is continuing to look good for M&A for the rest of the year. Supporting evidence includes:

  • The Conference Board Consumer Confidence Index was 127.7 in March, a decline from February but still very high.
  • US unemployment is 4.1%, the lowest rate in 17 years, according to the U.S. Bureau of Labor Statistics.
  • The National Federation of Independent Businesses Index of Small Business Optimism was 107.6 in February. This is a record high level of confidence in the economy among small business owners.