Tech M&A Gets Grounded in Q3 - What Happened?

Tech M&A Gets Grounded in Q3 - What Happened?
Analyst: Brenon Daly

With both confidence and currency still in strong supply in early summer, it was business as usual for the tech industry's dealmakers at the start of the just-completed third quarter. Corporate acquirers and private equity (PE) firms continued to put up sizable prints early in Q3, keeping 2015 on track for the highest level of M&A spending in 15 years. Everything seemed to be in place for the record romp. And then, about halfway through the quarter, everything got a bit more uncertain as black swans appeared in the summer skies.

Tech acquirers' confidence eroded unmistakably in mid-August as equity markets around the world got routed, with some indexes tumbling hundreds of points in a single session. As the economic outlook dimmed around the globe, valuations for buyers and their holdings dropped as well. If the stock market uncertainty didn't knock buyers out of the tech M&A market entirely, it at least caused them to scale back their acquisitions. Just seven of Q3's largest 20 deals came after the mid-August turmoil, according to 451 Research's M&A KnowledgeBase. Spending in the back half of the quarter dropped 20% compared with the first half.

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