PwC put out a great report on acquisition trends in tech. It’s worth reading. I try to pay attention to the M&A acquisition trends because understanding the minds of tech acquirers is important when evaluating prices for startups – not that VCs are very sensitive to changes in terms, but it’s nice to have a sense of longer term trends.
Below, I’ve copied a table below of the aggregate M&A data from the report. Click for a bigger copy.
There a few things here worth noting. First, there’s an error in Q2 11 totals and the total deal value should be 26,561, if the individual elements are correct. Assuming that’s the case, then tech M&A total deal value is relatively constant over this 9 month period, increasing about 10%.
Secondly, the number of acquisitions declined. M&A deals worth $50M or less fell by more than 30% over the past nine months. It’s hard to know if the biases of this data tend to underreport small acquisitions, but if we take the numbers as true, this means that small outcomes for startups are harder to come by. Acquirers target companies that will have larger impacts on their businesses.
So, if there are fewer acquisitions but the total amount spent has remained constant, price per acquisition should increase. And that’s precisely the case. Over the past 9 months, the average price paid per company has increased 27% overall. This is great news for startups and VCs.