Cloud, Managed Services and Software-as-a-Service dominating tech industry deals

New mergers and acquisitions in the tech industry are reported every week, but the market for the past year has been dominated by cloud computing and Software-as-a-Service businesses, according to a recent report by Ernst & Young. 

The global accounting firm recently published a report on the state of M&A in the technology sector, highlighting that the “megatrend” in favor of cloud (including managed services) and SaaS companies is leading the pack of deal-driving trends. Specifically, cloud and SaaS-related mergers accounted for more than 15% of global technology M&A deal volume in 2012. Examples of these deals include supply chain management, sales and marketing SaaS, managed services, and cloud-oriented networking gear. Analysts added that big data and analytics-related deals also saw an increase, but they are still not at the level of Cloud and SaaS deals.

Overall M&A deal activity is still below the 2007 level but technology remains a bright spot. Ernst & Young researchers said that tech deal volume held steady because companies are engaging in smaller transactions motivated by the major technology shifts such as cloud and mobility. The researchers think that most companies are moving cautiously because of risks associated with the uncertain macroeconomic environment.

The final numbers for the first quarter of 2013 are not in, but analysts expect that deal volume will be down compared to the fourth quarter of 2012. For the year, they expect 2013 to be comparable to 2012, with an increasing number of deals in the second half of the year.