<article>Tech and non-tech companies that are being disrupted by innovative digital technologies turned to M&amp;A in numbers that made Q3 2016 another blockbuster deal quarter, according to the &#8220;<a style="color: #000080;" href="http://www.ey.com/gl/en/industries/technology/ey-global-technology-mergers-and-acquisitions" target="_blank">EY </a><a style="color: #000080;" href="http://www.ey.com/gl/en/industries/technology/ey-global-technology-mergers-and-acquisitions" target="_blank">Global technology M&amp;A report — July-September final look</a>&#8220;.</article>

Tech and non-tech companies that are being disrupted by innovative digital technologies turned to M&amp;A in numbers that made Q3 2016 another blockbuster deal quarter, according to the &#8220;<a style="color: #000080;" href="http://www.ey.com/gl/en/industries/technology/ey-global-technology-mergers-and-acquisitions" target="_blank">EY </a><a style="color: #000080;" href="http://www.ey.com/gl/en/industries/technology/ey-global-technology-mergers-and-acquisitions" target="_blank">Global technology M&amp;A report — July-September final look</a>&#8220;.
With $155.5 billion in disclosed value, Q3 2016 is now the third-highest aggregate value quarter on record. This marks an increase of 22 per cent from Q2 2016 and 138 per cent year-over-year (YOY). At $349.4 billion, year-to-date (YTD) aggregate value is 30 per cent higher than YTD 2015’s all-time record pace.
Driven by activity in Japan, China, India and Australia (Asia Pacific &amp; Japan or APJ) value rose to a new record where disclosed value rose 33 per cent sequentially and 2156 per cent YOY to $52.3 billion in Q3 2016.
Demonstrating the region’s rapid tech M&amp;A growth, APJ’s 1$20.8 billion in aggregate value is already more than double the $51.5 billion total for the whole of 2015.
<a href="http://www.dealstreetasia.com/wp-content/uploads/2016/12/top-10-deals-q32016.png" rel="attachment wp-att-61115"><img loading="lazy" decoding="async" width="700" height="339" class="aligncenter size-full wp-image-61115" src="http://www.dealstreetasia.com/wp-content/uploads/2016/12/top-10-deals-q32016.png" alt="Top 10 deals of Q3 2016. Credit: EY" srcset="https://media.dealstreetasia.com/uploads/2016/12/top-10-deals-q32016.png?w=700 700w, https://media.dealstreetasia.com/uploads/2016/12/top-10-deals-q32016.png?resize=768,371 768w" sizes="(max-width: 700px) 100vw, 700px" /></a>
<h3 style="text-align: justify;">Deal focus</h3>
Many deals focused on cloud/SaaS, mobility, big data analytics, gaming, and advertising and marketing. The blockbuster size of APJ deals reveals the strong acquisition appetite of APJ companies. In fact, the $32.4 billion SoftBank Group–ARM mega deal was the largest global transaction for the quarter and accounted for 62 per cent of the region’s deal value.
This combined with four other deals where US and EMEA companies were targeted by Japanese and Chinese buyers accounted for 89 per cent of APJ value.
The regional trend toward big-ticket deals is a global phenomenon. Q2 2016&#8217;s new record for the most tech deals at or above $1 billion was surpassed in Q3 2016 with 32 deals, four more than the prior record of 28 big-ticket deals in 2Q16; a total aggregate value of $129.7 billion saw this value more than triple that from the same quarter in 2015.
Speaking on this development, Jeff Liu, EY Global Technology Industry Leader, Transaction Advisory Services, said, “Technology dealmaking is setting records because all buyers are motivated in the current environment. Incumbent tech companies seek deals to accelerate mobile- and cloud-driven transformations; non-tech companies seek strategic technologies; and private equity (PE) firms seek opportunity in hidden gems overlooked by many investors.”
Globally, M&amp;A records were established by  private equity (PE) firms and cross-border (CB) buyers, with PE technology dealmakers driving a second consecutive record high for aggregate quarterly disclosed value at $36.1 billion. This is 40 per cent more than Q2 2016&#8217;s prior record.
Meanwhile, cross-border aggregate deal value soared to $80.4 billion, eclipsing the prior all-time record by 85 per cent. YTD 2016, the current activity has set a new full-year CB value record.
<a href="http://www.dealstreetasia.com/wp-content/uploads/2016/12/corporate-PE-deals.png" rel="attachment wp-att-61114"><img loading="lazy" decoding="async" width="700" height="477" class="aligncenter size-full wp-image-61114" src="http://www.dealstreetasia.com/wp-content/uploads/2016/12/corporate-PE-deals.png" alt="Growth of corporate and PE deals to Q3 2016. Credit: EY" srcset="https://media.dealstreetasia.com/uploads/2016/12/corporate-PE-deals.png?w=700 700w, https://media.dealstreetasia.com/uploads/2016/12/corporate-PE-deals.png?resize=768,523 768w" sizes="(max-width: 700px) 100vw, 700px" /></a>
<h3 style="text-align: justify;">Technology growth drivers</h3>
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Digital transformation has been credited as a driver for technology and non-technology companies alike, who are acquiring strategic technologies and divesting non-strategic assets in Q3 2016 as they consolidate.
Abundant deals of both types helped propel Q3 2016 to blockbuster values for global technology M&amp;A, despite the reduction in volume. Tighter venture capital (VC) markets and an all-but-closed IPO window also contributed to this deal environment, as did companies seeking global growth. Cross-border deals also surged 85 per cent compared to Q2 2016.
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According to the EY <a style="color: #000080;" href="http://www.ey.com/Publication/vwLUAssets/EY-3Q16-global-technology-m-and-a-report/$FILE/EY-3Q16-Global-technology-M-and-A-Report-03762-164GBL.pdf" target="_blank">report</a>, in the technology sectors, while semiconductor targets had more disclosed value ($54 billion) than any other technology segment, several key areas experienced dramatic growth.
Five deals above $1 billion drove security to a seven-fold YOY increase in aggregate disclosed deal value to $16.9 billion, while deals targeting smart mobility and advertising and marketing technologies quadrupled YOY in disclosed value, rising 305 per cent and 333 per cent respectively. The Internet of Things (IoT) value nearly tripled YOY on the strength of four such deals — including the quarter’s top deal by dollar value, at $32.4 billion.
<a href="http://www.dealstreetasia.com/wp-content/uploads/2016/12/EY-deal-trends-q32016.png" rel="attachment wp-att-61116"><img loading="lazy" decoding="async" width="700" height="411" class="aligncenter size-full wp-image-61116" src="http://www.dealstreetasia.com/wp-content/uploads/2016/12/EY-deal-trends-q32016.png" alt="Sectorial deal trends for Q3 2016. Credit: EY" srcset="https://media.dealstreetasia.com/uploads/2016/12/EY-deal-trends-q32016.png?w=700 700w, https://media.dealstreetasia.com/uploads/2016/12/EY-deal-trends-q32016.png?resize=768,450 768w" sizes="(max-width: 700px) 100vw, 700px" /></a>
Joongshik Wang, EY Asean Transactions Leader for Technology, Media and Telecommunications, notes: “Asian companies are expanding their M&amp;A appetite beyond traditional technology space in developed countries. The main reason for increasing cross-border technology investment is to secure R&amp;D and intellectual capabilities, which can be commercialized in the Asian market.&#8221;
&#8220;In Southeast Asia, there are already more than five US$1b-tech ‘unicorns’ and we are seeing more investments in the sharing economy space than traditional e-commerce. In that light, the e-commerce sector may experience more mergers and acquisitions as a result of the need to consolidate,” he adds.
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Technology advances and digital disruption fuelled the growth of blockbuster deals in Q3 2016, according to EY. 

Tech disruption fuels blockbuster global M&As in Q3: EY

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