SalesForce – Dealers are waiting Tech M&A to keep the race red; CEOs reflect on dream offers
Photographer: Marc Borchert / Getty Images
Photographer: Marc Borchert / Getty Images
The dealmakers say tech CEOs are considering their dream deals after a record year of global tech mergers and acquisitions that saw mega-deals in areas ranging from chips to enterprise software.
The global volume of technology and internet mergers and acquisitions reached $ 470 billion in 2020, just behind the dot-com bubble of 2000, according to data compiled by Bloomberg.
Salesforce.com Inc.’s December announcement that it was buying Slack Technologies Inc. for $ 25 billion – the biggest software deal of the year – could prompt other companies to revisit their wishlists, said counselors.
“Just the visibility of this transaction, a large number of people pursuing dream deals using their currency resonated with others,” said Sam Britton, co-director of global technology, media and telecommunications at Goldman Sachs Group Inc .. “I think we’re going to see similar things, maybe not this size, but people trying to capture their dream deals.”
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Global M&A Volume for Tech and Internet Firms Reached $ 470 Billion in 2020
Source: Bloomberg
Potential buyers will look to see if the market is supporting the stock of trading buyers. Salesforce shares have fallen about 14% since the Slack deal, wiping out $ 32 billion from its market cap in what might be a cautionary tale.
Other buyers performed better with smaller transactions. Twilio Inc. saw its shares gain $ 4 billion in market value in October when it announced a $ 3.2 billion all-stock deal for customer data company Segment.
Advisors expect enterprise tech companies with a market value of between $ 20 billion and $ 100 billion to make acquisitions as they plan to overtake companies like Adobe Inc. and formerly Salesforce. software companies that are now valued at over $ 200 billion. This class of the next big earners could include Twilio, ServiceNow Inc., Snowflake Inc., Zoom Video Communications Inc. and Okta Inc., industry bankers have said.
More mature tech companies such as SAP SE and Oracle Corp., meanwhile, could seek transformation offerings similar to the purchase of Red Hat Inc. by International Business Machines Corp.
IPO lure
Big tech players still need to persuade private companies to sell to them instead of going public in a strong IPO environment. The market welcomed the stock market debut of Snowflake and Airbnb Inc. last year by doubling their stock prices. DoorDash Inc. was rewarded with an 86% first-day share rate.
The robust IPO market could contribute to mergers and acquisitions, especially with blank check company IPOs continuing to climb. Once the Special Purpose Public Acquisition Companies, or SPACs, begin their search for merger targets.
“The strength of the IPO market does not detract from mergers and acquisitions,” said Marco Caggiano, co-director of North America mergers and acquisitions at JPMorgan Chase & Co. “It actually generates more PSPC, which in turn drive the volume of mergers and acquisitions.
Although the coronavirus pandemic has affected many industries, it has brought the tech space to light as much of life becomes virtual. CEOs got glimpses of their IT systems during the pandemic, which could fuel IT spending for decades as companies adapt to new ways of working, said Jason Auerbach, global co-director of TMT at UBS Group AG.
“Anytime there are these kinds of shifts in technology spending, it spurs mergers and acquisitions,” Auerbach said. “For many large-cap tech companies, if you want to continue to evolve and grow, mergers and acquisitions will continue to be the most efficient way to do it most of the time.”
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