Hampleton Partners, an international mergers and acquisitions (M&A) and corporate advisory firm for technology companies, issued 11 technology M&A market reports for 2H 2017 in the key business segments of artificial intelligence (AI), augmented reality/virtual reality (AR/VR), automotive technology, cybersecurity, digital marketing, e-commerce, enterprise software, financial technology, internet of things (IoT), IT services, and SaaS & cloud services.

The research shows that technology M&A cooled down in the first half of 2017, while some sectors -- such as articificial intelligence, augmented reality/virtual reality, and cybersecurity -- saw strong gains as more media attention falls on the segments.

“M&A and funding is accelerating in select sectors, as more ‘non-technology’ or traditional companies and private equity firms move to acquire and invest in technology and innovation," said Miro Parizek, Principal Partner of Hampleton Partners. "It is critical to be more nuanced and to look deeper into specific sectors and the related data when assessing deal activity and planning strategy."
 
Key findings in the technology M&A market reports for 2H 2017 include the following:

• Artificial Intelligence: Acquisitions of AI related targets speeds up dramatically as deal volume increases 179% versus the previous year. Total M&A relating to artificial intelligence now exceeds 100 transactions in the last 24 months to June 2017, in concert with the growing media attention dedicated to the sector.

• AR/VR: Investment in augmented reality and virtual reality has shot up in recent years, with a majority of related M&A activity occurring in the US. In the last 12 months, nearly 80% of the $620+ million worth of deals in AR/VR were related to hardware development.

• Cybersecurity: Headline grabbing data thefts, government and corporate breaches underpin high growth in spending on cybersecurity driving investment and M&A activity in the sector. Deal volumes remain high with 80 security related acquisitions tracked in 1H 2017. Valuations maintain a healthy level as well with EV/S (i.e. revenue multiples) clocking in at 4.7x on disclosed transactions for the period 2015 through 1H 2017.

• Automotive Technology: European investors are setting the pace in automotive technology, with 59% of automotive technology companies acquired by European buyers compared with 37% purchased by North American investors.

• Digital Marketing: Deal sizes in marketing application software M&A grew at the start of the year, with total transaction values for 1H 2017 up 20% to $1.7 billion versus the previous half-year period.

• E-Commerce: The global e-commerce industry is rapidly evolving as European investors dominated another half-year period of regional dealmaking. In the last 30 months, European buyers acquired 63% of regional targets compared to 32% of targets from North American investors.

• Enterprise Software: Global M&A volume increased 12% in 1H 2017 versus the previous half-year period with earnings based valuation metrics (EV/EBITDA) remaining stable at 14.5x. Political uncertainty in Britain had little impact on deal flow in enterprise software as the number of UK deals grew by a modest 5% from the previous half year and accounted for 35% of all deals in Europe.

• Financial Technology: M&A deal activity in Fintech is up 8% in 1H 2017 and beginning to recover from its sharp drop in 2H 2016, however, still not at the levels registered from mid-2014 to mid-2016. Within the Fintech sub-sector, Online Financial Services, valuations are increasing as private equity purchasers focus on purchasing payment providers.

• Internet of Things: Intel, Verizon and ARM head up the list of Top Acquirers in IoT. 198 buyers were active snapping up 239 IoT assets from 2015 through 1H 2017. While the median revenues paid on disclosed transactions has come in at 3.5x during that period, some deals were inked with EV/S ratios as high as 21x.

• IT Services: Of the top 50 highest valued deal during 1H 2017, more than half were cross border deals, building on from the second half of 2016 where 40% of the top 50 transactions crossed national borders. Additionally, global private equity deal flow showed a marked turnaround. There were 48 private equity deals announced in 1H 2017, doubling the number of deals private equity buyers closed during the previous six months.

• SaaS & Cloud: SaaS and Cloud sector picked up in 1H 2017 as deal flow in the information management and enterprise applications/networking sub sectors increased this year by 7%, as interest from buyout funds drove to the total value of $5.22 billion across the SaaS & Cloud sector.

Read the report in its entirety here