New S&P Tech M&A Analysis: A Trillion-Dollar Run Rate

New S&P Tech M&A Analysis: A Trillion-Dollar Run Rate

According to a newly released analysis from S&P Global Market Intelligence – after plummeting in the early days of the pandemic, spending on acquisitions soared as increasingly confident buyers started signing off on ever-larger tech purchases. The late shopping spree pushed the value of deals announced in just the final half of last year higher than the full-year totals for every year except two since 2002, according to 451 Research’s M&A KnowledgeBase.

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Q3 2020 hedge fund letters, conferences and more

A Trillion-Dollar Run Rate

By Brenon Daly

InvestingADW Capital had an incredible 2020 with a 119.2% net return for the full year. At a time when most other funds have struggled with relatively low returns, ADW posted double-digit returns in several months of 2020. In December, the fund returned 19.91%, while in November, it posted a return of 39.63%. For the fourth Read More

A trillion-dollar run rate. Astonishingly, that’s where the tech M&A market left off in the plague-ravaged year of 2020.

After plummeting in the early days of the pandemic, spending on acquisitions soared as increasingly confident buyers started signing off on ever-larger tech purchases. The late shopping spree pushed the value of deals announced in just the final half of last year higher than the full-year totals for every year except two since 2002, according to 451 Research’s M&A KnowledgeBase.

From the start of July through the end of December, we tallied a staggering $485bn worth of spending on tech and telecom transactions. It was an exceptional period for dealmaking, made all the more remarkable because the record activity came as the rate of coronavirus infections hit their highest levels around the world. Yet not even the successive waves of COVID-19 over the past six months could shut down the historic events in the tech M&A market:

The Historic Events In The Tech M&A Market

  • Acquirers announced a record 79 purchases valued at more than $1bn in the second half of 2020, according to the M&A KnowledgeBase. That was more than three times the number of blockbusters announced in the first half of the year.
  • From July through December, buyers relentlessly printed billion-dollar deals at a pace of one every two weeks.
  • Included in those deals at the top end of the market in 2H 2020 were four of the 10 largest overall tech transactions in the M&A KnowledgeBase, which goes back to 2002. (To be clear, the totals for tech exclude telecom acquisitions.) As my colleague Scott Denne recently noted, software deals figure prominently in those prints.

It takes buckets of confidence to sign a check that has 10 or even 11 numbers in the price. And it takes even more to do that during a pandemic, without much – if any – face-to-face negotiations or in-person due diligence. (No kicking the tires before signing; no handshakes after.) Further, that confidence hasn’t wavered as we’ve flipped the calendar. Our M&A database already has five billion-dollar deals in 2021.

Number of Monthly Tech Deals Valued at $1bn+, 2020

Tech Deals

Source: 451 Research M&A KnowledgeBase; S&P Global Market Intelligence

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