Ernst&Young finds big businesses hungry for small startups

Ernst&Young finds big businesses hungry for small startups

Original post by Rebecca Grant via venturebeat

Just in time for Valentine’s Day, Ernst & Young released its quarterly report about unions in the technology world.

The report found that the total value of global technology mergers and acquisitions declined by 35 percent in 2012. While at first this seems startling, the good news is that the deal value for the fourth quarter is only down 4 percent as compared to last year, and deal volume remained consistent.

“Back in 2011, there were a couple deals in the third quarter worth over $10 billion,” said Joe Steger, head of Global M&A at Ernst & Young in an interview with VentureBeat. “This year, the largest deal was only $5 billion. This means that we are seeing some caution in the marketplace due to valuations and macrocosmic uncertainty that made buyers reluctant to do large transformative deals.”

The deals that did occur were on a smaller scale. In most cases, the activity surrounded nontechnology companies buying technology companies to adapt quickly to a changing market. Larger companies that operate using older models often find it more beneficial to acquire startups to make use of their technology rather than to build it from within.

“Companies are very interested in doing smaller, strategic deals to get a leg up and improve their stance in some f these newer and emerging technologies that are a driving orce iwhtin the sector,” Steger said. “Tech is becoming a more-and-more important enabler in other sectors as a way for businesses to meet their objectives.


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