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February 27, 2013

Mobile, social, analytics and security to drive technology deals in 2013: PwC

The cumulative technology deal value for 2012 declined 17% from 2011.

By CBR Staff Writer

According to a report from PwC, future technology deals are expected to focus on mobile, social, analytics and security in 2013.

PwC’s report revealed that private equity buyers would continue to engage in a more prominent role along with a recovery of technology divestitures.

PwC US technology deals leader, Rob Fisher, said that the pressure of disruptive innovation has technology companies constantly seeking the next competitive differentiator, which requires investing in new talent, new technologies, R&D and M&A as a means to all three.

"With technology corporate cash balances continuing to grow and a large amount of capital held by private equity funds waiting to be deployed, 2013 could prove to be an important year for technology deals and divestitures," Fisher said.

During 2012, the cumulative technology deal value had closed at $103.4bn, a 17% drop compared to 2011, which was mainly due to uncertainties in economy and politics thatwere responsible for driving deal volumes down by 19%.

According to the report, US deal makers mainly focused inward in the midst of domestic economic softness and global uncertainty.

The report revealed that technology deals have been continually shifting away from hardware-focused to software and Internet transactions, due to the focus of overall marked industry on cloud-based technologies.

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In 2012, private equity deals included 34% of total technology deals, while software and Internet transactions comprised 63% of volume and 76% of value.

"With some of the lowest credit rates in recent history and significant investment reserves waiting on the side-lines, tech-focused private equity firms are well-positioned to acquire technology businesses in 2013," Fisher said.

Due to a decline in mergers and acquisition (M&A) activities, divestiture transactions rose 59% in 2012 to 311, when compared to just 201 in 2011.

The cumulative divestiture deal value for transactions reached $31.2bn in 2012, a 95% rise compared to $18.5bn during in 2011.

"After essentially a decade long industry consolidation, technology companies are poised to engage in what could be a significant resurgence in divestiture activity as they shed lackluster acquisitions and unwanted assets as a result of strategic realignment and adjustments to adapt to today’s shifting technological landscape," Fisher added.

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