Dive Brief:
- In the first half of 2020, the total value of merger and acquisition transactions in tech peaked at $73 billion, a significant decrease from the first half of 2019, according to a report from PwC. Transaction volume is down 6% when compared to the same period.
- Deal value fell 58% from H1 2019, its lowest point for any half year since the company began tracking M&A deals in 2016.
- The average size of disclosed M&A deals in tech reached $94 million, a 56% drop from the first half of 2019. The largest acquisition deal in 2020 thus far was the Koch Industries $13 billion acquisition of cloud-based ERP company Infor.
Dive Insight:
Amid financial uncertainty caused by the pandemic, investors shored up assets and focused on liquidity as deals penned prior to the crisis went through.
Top tech mergers and acquisitions for 2020 by value
| Announced | Acquirer name | Target name | Deal value | Segment |
| 2/4/2020 | Koch Equity Development LLC | Infor, Inc. | $13B | Software |
| 6/10/2020 | Just Eat Takeaway.Com | Grubhub, Inc. | $7.3B | Internet |
| 2/24/2020 | Intuit, Inc. | Credit Karma, Inc. | $7.1B | Software |
| 1/13/2020 | Visa, Inc. | Plaid, Inc. | $5.3B | IT services |
| 6/26/2020 | Investor Group | Corelogic, Inc. | $4.4B | IT services |
| 2/18/2020 | RSA Security, Inc. SPV | RSA Security, Inc. | $2.1B | Software |
| 3/2/2020 | BMC Software, Inc. | Compuware, Corp. | $2B | Software |
| 6/1/2020 | Zynga, Inc. | Peak Oyun Yazilim & Pazarlama AS | $1.9B | Software |
| 2/6/2020 | Forescout Technologies, Inc. SPV | Forescout Technologies, Inc. | $1.9B | IT services |
| 3/26/2020 | Microsoft Corp. | Affirmed Networks, Inc. | $1.4B | IT services |
SOURCE: PwC 2020 Technology deals insights report.
Deal activity is expected to "steadily pick up in the second half of 2020," according to PwC. Companies adjusting to the new methods of work and consumer trends will shift their focus from cost cutting and open up to new investment opportunities.
Software remains a subset of interest within tech M&A, a trend the firm has tracked since 2018. With 437 transactions and a combined deal value of $42 billion, the software space provided 58% of 2020's deal value to date.
But the progression of the pandemic could impact risk tolerance among decision makers. A second wave of COVID-19 infections, along with its financial implications, topped a list of emerging risks executives are tracking.
In a potential recovery of M&A in tech, another space to watch is artificial intelligence, which capped off a record year for consolidation in 2019. AI companies underwent 231 M&A deals and 10 initial public offerings (IPO) last year, nearly doubling 2017's deal volume, according to data from CB Insights.
Companies in the AI space that entered the crisis "just scraping by will be ripe for acquisition," said Steve Hill, global head of innovation at KPMG, in an interview with CIO Dive. Organizations that invest in their technology will emerge from the pandemic in a stronger position, and target struggling companies for acquisition.
But the pandemic will continue to press companies toward innovation, and by 2024 three-quarters of companies will move their use of AI away from the pilot stage and toward operationalization.
