Acquirers around the world spent a paltry $2.9bn on tech deals in the just-completed month of May, according to 451 Research's M&A KnowledgeBase. That stands as the lowest value for any month since the depths of the Credit Crisis. Further, both the number of deals and spending attached to them in May dropped from the similarly coronavirus-scarred month of April.
Like the previous month, May spending represents just one-tenth the amount buyers would typically spend in a month on tech transactions. But in many ways, the recent results are more ominous than those from April. (See our full report on tech M&A in April as well as our early report on Q1's activity.)
Deal volume in May posted an 11% month-over-month decline, slumping to the fewest monthly tech acquisitions in a year and a half. (Deal volume last month only slightly topped December 2018, when global equity markets crashed in a late-year bear market.) The M&A KnowledgeBase shows that the main reason for the overall decline in the market is that private equity firms, which have been stymied by hard-to-find financing, aren't shopping like they once did.
But deeper, more intractable problems are currently weighing on the tech M&A. That shows up when we look at last month's slump in the context of the strategic acquirers that have led the overall market for years. Key signals from some of tech's household names would have otherwise suggested a much larger upswing in activity:
- Mainstay acquirers such as Apple, Facebook, Cisco, Twitter and VMware all bucked the downturn and put up prints in May.
- The 'Wintel' duo double-dipped in May, putting both Intel and Microsoft roughly back on track to match recent annual acquisition activity levels in 2020, despite the coronavirus disruption.
- Companies such as ZScaler, Zoom Video and NVIDIA that have enjoyed a bump in their business during the COVID-19 outbreak took some of their good fortune and put it to work in the M&A market last month.
Yet, despite all that activity from big-name buyers, the total number of tech transactions last month plunged more than 20% from May 2019. Overall, as last month's decline underscores, the recovery in tech M&A is several steps behind other markets that are beginning to make their way back to pre-coronavirus levels. The tech M&A market appears to be entering a 'lower for longer' period of its own.
Brenon Daly oversees the financial analysis of 451 Research's Market Insight and KnowledgeBase products, having covered more than a quarter-trillion dollars' worth of deal flow for both national publications and research firms.
Sheryl Kingstone leads 451 Research’s coverage for Customer Experience & Commerce, which covers the many aspects of how customer experience is a catalyst for digital transformation. She oversees the company’s coverage of a variety of customer experience software markets spanning ad tech, marketing, sales, commerce and service.
Keith Dawson is a principal analyst in 451 Research's Customer Experience & Commerce practice, primarily covering marketing technology. Keith has been covering the intersection of communications and enterprise software for 25 years, mainly looking at how to influence and optimize the customer experience.