Increased Role of Private Equity in Tech Sector M&A in 2013
AUSTIN, TX, August 30, 2013 -- As a financial professional working in the tech sector in Texas, experienced investment banker Alex Klingelberger says the industry is experiencing significant shifts and growth. However, according to some reports, some may believe that 2013 trends in technology M&A have proven unattractive to sellers, especially in regards to what growth has been spurred by corporate deals. Despite the recent drop in corporate deal making, Klingelberger and other industry professionals assert that private equity sponsorships are helping boost M&A performance.
In order to illustrate this trend, Alex Klingelberger points to a recent article from Economia that cites new research from EY Global Technology. The article reports, "According to EY's Global technology M&A update: April-June 2013, the aggregate value of all deals for Q2 this year was $33.4bn, down 13 percent from the first quarter but largely flat year-on-year. Deal volume in the second quarter of 2013 fell to the lowest level since 2010 with 627 deals, down 14 percent year-on-year and five percent on the previous quarter. In contrast, deals financed by private equity have soared. Volumes were up 10 percent on the same period next year, and 24 percent on the quarter. Value-wise, deals soared a massive 208 percent on the year to $13.9bn from $4.5bn in Q2 last year. Corporate aggregate value of disclosed value deals fell 32 percent on the year to $19.5bn and, at 570 deals, corporate volume hit its lowest quarterly level since 2009 (when every quarter had fewer deals)."
Having remained active in this field within the Texas market, Alex Klingelberger explains, "The trends in technology M&A for Texas-based companies have reflected broader trends in the global M&A market for the tech industry. We've seen fewer large mid-market transactions involving strategic buyers, and the increase in activity by private equity firms is a clear trend this year." While these trends remain clearly visible to industry experts, Klingelberger believes it is essential that professionals understand the forces that are driving such transitions in order to lay out a path for effective market navigation.
For example, Economia suggests, "EY said the growth in private equity-financed deals was driven by a number of factors including [favorable] credit availability at low interest rates, activist shareholders and investors spotting opportunities to create value that corporate buyers might not see."
In regards to the predicted growth for technology M&A volume highlighted in the article, Alex Klingelberger concludes, "Based on the activity level we are seeing with PE sponsors, I think it's reasonable to assume the number of transactions closed by financial buyers will continue to increase for the balance of the year."
Alex Klingelberger is a seasoned investment banker and valuation professional who has served Emerging Growth companies for more than a decade. Klingelberger specializes in advising top companies on matters including mergers and acquisitions, expansion capital, tax valuation and financial regulatory compliance. With a strong track record for delivering top results in a short amount of time, Klingelberger has successfully built a solid client base that continues to expand. As a professional who strives to understand the individual needs of each client, Klingelberger has developed a formidable acumen in the software and tech services industries. Today, Klingelberger, a graduate of the University of Texas, serves as the Managing Director of his own boutique investing banking firm known as Whitehawk Advisory.