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Four hot trends driving technology M&A growth in 2015

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Four hot trends driving technology M&A growth in 2015

Tech to be most active sector; access to intellectual property and talent motivating buyers.

According to a survey by professional services firm KPMG, the market opportunities in mobile, cloud, data and analytics, and security are expected to drive technology industry mergers and acquisitions (M&A) in 2015.

"Our survey findings indicate that the ramp up in tech M&A last year will carry into this year driven by several trends, including the importance of mobile, more advances in data and analytics, the continuing heightened focus on security, and the ongoing attractiveness of the cloud," said Chad Seiler, Technology Deal Advisory practice leader at KPMG LLP. "These factors, combined with large cash reserves, are fueling M&A activity. Divestitures are likely to continue at relatively high levels as well."

In the KPMG M&A Outlook survey of 738 U.S.-based finance officers and M&A professionals covering a variety of industries, nearly half said technology will be the most active industry for mergers and acquisitions in 2015, followed by pharmaceuticals/biotechnology.

More than 80% of the tech M&A professionals expect their clients to make at least one acquisition in 2015, with almost half (47%) expecting one to three acquisitions and 11% saying their clients will conduct 11 or more in 2015. Half of the tech respondents anticipate the average value of the acquisitions to be $250 million or less, followed by $250 to $999 million (46%), and $1 billion or greater (4%).

The primary motivators for technology deals are access to intellectual property and/or talent, bolt-on acquisitions to enhance new products, the acquisition of innovative technologies or products, the desire to enter into markets, and the desire to expand existing technology platforms.

The technology M&A professionals in the survey overwhelmingly said that the most common challenge to deal making in the year ahead was the valuation disparity between buyers and sellers (67%). They were also concerned with the identification of suitable targets and the buyer/target alignment on post-deal execution strategy.

In addition to M&A, the tech executives also will focus on new product development to increase revenues in 2015, said 44%, and geographic expansion, according to 22%.

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