Tech M&As equal US$119B in 2010, report says

Tech firms playing in the mobile, social and cloud industries drove the total value of global mergers and acquisitions in the technology space to US$119 billion in 2010, according to a new report from Ernst & Young LLP. The 26 per cent increase from 2009 was a result of a spike in the number of small deals, plus several hundred massive ones.

The study, released on Tuesday, found the total number of worldwide M&A deals up 41 per cent year-over-year, increasing from 1,886 deals in 2009 to 2,658 deals in 2010. Canadian companies were involved in 83 deals last year, up about 17 per cent from 71 deals in 2009.

There were 26 deals over the $1-billion mark and another 216 deals of more than $100 million. To compare, in 2009, only 132 deals topped the $100-million mark.

For professional services firm Ernst & Young, the message is that bigger firms are acting quickly to scoop up smaller start-ups and take advantage of emerging tech trends. This movement also appears to be occurring regardless of region, as cross-border deals also continued to increase, accounting for 34 per cent of all deals in 2010.

“This industry does not look at borders and where the technology lies,” said Karen Atkinson, the Canadian technology industry leader with Ernst & Young. “It just focuses on the technology itself and how to get it.”

For Canadian IT start-ups, developers and professionals, this could also mean more financing will be readily available from cash-filled global tech firms and investors.

“The important thing is for them to continue to get their name out there and figure out the best way of exploiting their brand and attracting financing,” Atkinson said.

With cloud computing tools, mobile apps, and end point device technologies all still in the early stages of their ability to generate big returns, Atkinson expects the number of deals to continue to accelerate in 2011.

This trend was also the major theme of last November’s Technicity event in Toronto. The conference aimed to bring tech entrepreneurs, educators and IT professionals together to brainstorm how to create and build innovative tech start-ups in Toronto.  

“If you want to start a mobile company, you shouldn’t need to move to the Valley,” said David Crow, co-founder of marketing start-up Influitive Corp. and a speaker at Technicity. He added that the responsibility of strengthening Toronto’s IT and start-up community falls squarely on the shoulders of the area’s entrepreneurs.

While out raising money for start-ups in Silicon Valley, Crow said he always remembers to plug another entrepreneur or emerging company from Toronto. He said that fellow Toronto techies should bang at the same drum when dealing with investors abroad.

The latest report by Communitech Technology Association Inc. found that despite a global economic recession, tech companies in the Waterloo, Ont., region have grown by 21 per cent over the last two years. The firm indicated that the number of tech companies in the region has now surpassed 700, which is up from the 550 companies Communitech found in its 2008 report.

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