Merger and acquisition deals within the IT sector require more rationalisation, consolidation and integration than mergers and acquisitions within any other sector. This is positive news for contractors working in this industry due to the temporary nature of such deals and the fact that acquisitions are increasing in the IT sector.

Figures obtained from Ernst & Young show that mergers and acquisition activity in the tech sector grew for the fourth consecutive month. However the value of these deals has fallen “sharply” over the same period. The company reflected that any “big ticket” deals were currently on hold resulting in a two-thirds reduction in transaction values down from £24.2bn last year to £8.3bn currently.

Ernst & Young’s Joe Steger from their IT advisory services unit attributed this drop in value to the large acquisitions which were announced in the second half of last year. These companies are still integrating these acquisitions and are therefore holding off from any more deals. He also cited the common fourth-first quarter seasonal dip. He did, however, state that the outlook is bright for mergers and acquisitions activity within the IT sector this year with a possibility of “even robust growth”.

Forty deals within the first quarter saw a focus on applications and content as opposed to  infrastructure, with the central technology centred on mobility. However there was also close to three dozen deals with connections to social networking and nearly two dozen deals were connected to cloud computing. A further three dozen deals were driven by IT solutions within the health care sector while two dozen deals were driven by clean energy.

Mr Steger commented: “Macroeconomic indicators continue to turn positive in most regions of the world, although more slowly in some areas, such as Europe; the technology sector continues to present new opportunities resulting from mobility and technology-enabled innovation around information.”

He concluded: “These things lead to a ‘smart everything’ economy and the blurring and converging of technologies, industries, and work and personal life; and leading technology companies have significant cash reserves that provides the financial flexibility that readies them to do deals.”

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