Access the latest quantum technology

Quantum technology in Bristol and bath - find out more about how you can access the commercialisation of quantum technology for sensing and security

Monday, August 22, 2016

Industry approaches peak IoT

By Nick Flaherty www.flaherty.co.uk

The embedded industry is reaching 'peak IoT'.

The second quarter of 2016 saw incumbent tech companies pursue multiple transformational big-ticket deals according to the latest figures from EY. At the same time, private equity (PE) buyers set an all-time value record, and, a key indicator, non-tech buyers nearly doubled their value year-over-year while Chinese buyers already surpassed their full-year 2015 value level.

In all, 2Q16 was the third-highest-value quarter ever, with more deals at or above US$1 billion than in any previous quarter. The dramatic increase in non-tech companies buying up IoT, cloud and big data companies is reminiscent of the boom times of the semiconductor business where Chinese clothing conglomerate Nanya and even Coca-Cola were looking to invest in fabs.

At 1,039 deals, 2Q16 volume rose 4% sequentially and 2% year-on-year, driven by IoT activity. So far this year, 2016 has seen 2,041 deals, 2% ahead of 2015’s post-dotcom-record pace (only the year 2000 had more deals). The non-tech-buyer volume rose 28% year-on-year to 159 deals, and the value jumped 95% over 2Q15 to US$21.3 billion. 2016 now leads 2015’s non-tech-buyer pace by 27% in volume (306 deals vs. 241 in 2015) and 25% in value (US$38 billion vs. US$30.5 billion).



Digital transformation from cloud, mobile, social and big data analytics technologies motivated high-value dealmaking in 2Q16, helping 2016 to nearly catch up with 2015’s record pace — despite equity market volatility that has often derailed dealmaking in prior years.

"Because technology is an industry in major transformation, we expect 2016 technology M&A to continue at this near-record pace for the foreseeable future, driven by the disruptive digital technologies that the industry is itself bringing to market," says Jeff Liu, EY Global Technology Industry Leader for Transaction Advisory Services

Though both quarters round to the same US$127.2 billion in disclosed value, 2Q16 bested 2Q15 by US$55 million, only 4Q15 (US$189.8 billion) and 1Q00 (US$228.4 billion) posted higher values.


  • Big-ticket deals: With 28 deals at or above US$1 billion, 2Q16 blew past the prior record of 20 such deals (set in 4Q15). Three deals rose above US$5 billion, including one megadeal over US$25 billion.

  • PE buyers: US$25.7 billion in disclosed-value tech deals by PE buyers made 2Q16 the highest-value PE quarter on record — by only US$85 million. And with 95 deals, it’s the second-highest-volume PE quarter, falling just shy of 3Q10 (99 deals).

  • China: Chinese buyers recorded their highest-value tech quarter ever with US$32.3 billion in disclosed-value deals. It brought their YTD total to US$47.4 billion, which already is 19% ahead of their entire 2015 value of US$39.9 billion.

  • Hidden gems: Large incumbent tech companies that continue to scale down their focus drove divestitures to slightly more than 175 deals in 2Q16, the highest volume level we’ve seen yet. Disclosed value remained roughly equal to 1Q16, at US$16.7 billion. Three deals rose above US$1 
  • billion, including two with Chinese buyers.



The number of deals driven by Internet of Things (IoT) and big data analytics technologies increased at a faster pace than all others for both 2Q16 and YTD, well above the single-digit pace of overall global volume increases.

IoT volume rose 28% YOY for 2Q16 and 26% YTD; big data analytics volume rose 13% for the quarter and 29% YTD. In all, 6 of the 10 deal-driving technologies saw 2Q16 volume increases, the other four being cloud/SaaS, health care information technology (HIT), gaming, and payments and financial services.





Large incumbent tech companies pursuing transformation drove the biggest disclosed-value deals of 2Q16, but the quarter encompassed a diverse array of disruptive technology targets — and most of those appeared among the 28 big-ticket deals.

No comments: