Digital transformations drive blockbuster quarter · • 2Q16 aggregate value of $127.2 billion*...

Digital transformationsdrive blockbuster quarter

Global technology M&A report

Issue 32April–June 2016 final look

2 | Global technology M&A report: April–June 2016

02Highlights

03Volume, value rise:multiple records set

11Look ahead

12Regional snapshots

23Methodology

23Source notes

18Additional charts

Figure 1: A directional view of select deal-driving trends, 2Q16

Note: average deal value is based on the value of disclosed-value deals, while volume of deals includes both disclosed-value and undisclosed-value deals. Bubble size is based on each deal-driving trend’s share of total quarterly value.

Source: EY analysis of The 451 Group Research M&A KnowledgeBase, accessed 6 July 2016.

Ave

rage

dea

l val

ue (

$m

)

Number of deals noted

50 100 150 200 250 300 350 400

$1,000

$500

$0

$15,000

$11,000

Health care IT

Cloud/SaaS

Smart mobility

Security

IoT

Gaming

Connected cars

Social networking

Payment and financial technologies

Big data

Advertising and marketing technologies

*All values in this report are of disclosed-value deals only and all dollar references are in US dollars, unlessotherwise indicated.

2Q15 | $127.2b

2Q16 | $127.2b

77%10%10%

82%7%8%

3%

3%

<$100m $100m–$500m $500m–$1b >$1b

Figure 2: Aggregate value of announced deals by deal size, 2Q16 vs. 2Q15

Note: percentages may not total 100% due to rounding.


HighlightsThe combination of digital disruption and slow organic growth drove record ornear-record dealmaking levels in 2Q16, byincumbent technology companies seekingtransformation, non-tech buyers and privateequity (PE) firms. Deal volume trended upfrom a very high level and aggregate valuealmost doubled sequentially, boosted byChina’s growth. The first 2016 megadeal(i.e., above $10 billion) was announced.

• 2Q16 aggregate value of $127.2 billion* rose 91% from 1Q16 and 0.04% ($55 million)year-over-year (YOY). Thus, 2Q16 replaced 2Q15 as the third-highest tech M&A quarterever by value.

• Quarterly volume increased to 1,039 deals, up 4% sequentially and 2% YOY. It is the fourthof the past five quarters to top 1,000 deals.

• Deals driven by Internet of Things (IoT) and big data analytics technologies increased at a faster pace than all others for both 2Q16 and year-to-date (YTD), well above the single-digit pace of global volume increases.

• Cross-border (CB) aggregate deal value rose 68% sequentially to $37.4 billion, but fell14% YOY from 2Q15’s all-time record ($43.6 billion). n

Deal drivers

Non-tech-buyer deal value rose 28% sequentially — but still slipped to 17% of aggregate value from 25%. All drivers in Figure 1 increased in value YOY, except forbig data, and advertising and marketing.

• Social networking topped the chart in average value per deal, due in part to onemegadeal, followed by connected cars ata distant second.

• Besides IoT and big data, four other disruptive technologies saw YOY volumerise: cloud/SaaS, health care informationtechnology (HIT), gaming, and paymentand financial technologies.

• Year-to-date, five drivers grew in valueover 2015: big data, HIT, security, smartmobility and gaming. n

Deal size There was a big YOY shift to higher-valuedeals in 2Q16 — even though average value dipped slightly due to 2Q15’s multiple megadeals.

• Twenty-eight 2Q16 deals at or above $1 billion is a new record; they had $97.8 billion in value, down 6% from 2Q15.

• Volume also rose YOY (+32%) for mid-size deals ($100 million to $1 billion);their aggregate value increased 27%.

• But volume of deals below $100 millionfell 19% YOY, even as their value rose to$3.9 billion (up 18% and above the 2015quarterly average of $3.5 billion). n

Global technology M&A report: April–June 2016 | 3

02Highlights


11Look ahead


23Methodology

23Source notes

18Additional charts


1,014

1Q16 2Q162Q15

PE Corporate

937

771,002

910

92

1,039

944

95

“Near-record volume and valuelevels in the second quartershow that technology M&Acontinues to be the mostimportant tool of choice to helpcorporate strategy keep pacewith unprecedented disruptioncoming from rapidly advancingdigital technologies.”

Jeff Liu

EY Global Technology Industry LeaderTransaction Advisory Services

Volume, value rise; multiple records set Disruptive digital technologies continued driving tech and non-tech companies toseek transformational deals in 2Q16, even as the search for growth in slowingeconomies propelled many other big-ticket deals. The result: 2Q16 became thethird-highest-value quarter ever for global technology M&A — fueled in part by new all-time value records set by PE, non-tech and Chinese buyers. Volume andaggregate value both rose sequentially and YOY.

Incumbent transformations, activist investors, PE, cross-industry blur andChina drive most-ever big-ticket dealsWith 28 deals at or above $1 billion, 2Q16 blew past the prior record of 20 suchdeals (set in 4Q15). Equally striking in terms of evidencing the underlying strengthof tech M&A were a general shift to higher-value deals across all deal sizes and thediverse array of disruptive technology targets reflected among the 28 big-ticketdeals and 2Q16 dealmaking in general.

Global technologyM&A update

$559m$563m

$596m

$268m

$127,165m $66,670m $127,220m

1Q16 2Q162Q15

PE Corporate

Average value(corporate and PE)

Corporate average value

PE average value

$363m$349m

$988m

$503m

$558m

Figure 3: Total and average deal values for deals with disclosed values2Q15–2Q16

Figure 4: Total number of all announced deals 2Q15–2Q16


02Highlights


11Look ahead


23Methodology

23Source notes

18Additional charts

Up2Q16

1,039 dealsvolume rose 4% sequentially and 2% YOY


Disclosedvalue ($m) Deal type

Multiple of TTM EV/ revenue

Multiple ofTTM EV/EBITDA

Premium offeredAnnounced

Microsoft Corporation

Tencent Holdings Ltd.

Computer Sciences Corporation

Midea International

Symantec Corporation

Thermo Fisher Scientific, Inc.

Advanced Semiconductor Engineering, Inc.

Hillhouse Capital Management, Ltd.;Sequoia Capital China; Boyu CapitalConsultancy Co. Ltd.

ASML Holding NV

Thoma Bravo LLC

LinkedIn Corporation

Supercell OY

Enterprise Services division of Hewlett Packard Enterprise

KUKA AG

Blue Coat Systems, Inc.

FEI Company

Siliconware Precision Industries Co. Ltd.

Autohome, Inc.

Hermes Microvision, Inc.

QlikTech, Inc.

$26,200 13 Jun Corporate 8.2x 74.0x 54%

$8,568 21 Jun Corporate 3.7x 9.2x N/A

$6,000 24 May Corporate 0.4x N/A N/A

$4,747 18 May Corporate 1.4x 18.0x 23%

$4,650 12 Jun Corporate 7.8x N/A N/A

$4,392 27 May Corporate 4.4x 18.5x 18%

$4,335 26 May Corporate 2.1x 6.8x 10%

$3,570 18 Apr PE 5.1x 14.0x 12%

$3,087 16 Jun Corporate 16.5x 42.7x 32%

$3,000 2 Jun PE 4.2x N/A -3%

Buyer Target

Figure 5: Global top 10 deals, 2Q16This quarter, there were a total of 28 deals ≥$1b; the remainder of these deals are listed on page 22.

Factors shaping 2Q16 tech M&A included:

• Tech and non-tech companies alike pursued transformational deals, often to build broader end-to-end solutions in response to customer demand.

• Hidden gems. Though it may seem paradoxical at first, tech’s end-to-end solutions are becoming more focused on core competencies as divestitures continue to rise.

• Accelerating growth of IoT and big data analytics, which led the six disruptive digital technologies that all experienced higher volume growth in 2Q16 than the single-digital global growth averages.


02Highlights


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23Methodology

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18Additional charts

Aggregate value increasesmaking 2Q16 the third-highest-valuequarter ever

Figure 6: Global technology transaction scorecard (corporate and PE), 2Q16

Deals announced 2Q15 Sequential % change 2Q16

937 944 4% ▲ 1% ▲

202 202 24% ▲ 0% −

$112,857 $101,540 72% ▲ –10% ▼

$559 $503 39% ▲ –10% ▼

77 95 3% ▲ 23% ▲

24 26 –7% ▼ 8% ▲

$14,308 $25,680 242% ▲ 79% ▲

$596 $988 269% ▲ 66% ▲

Corporate and PE

Number of deals announced

Number of deals with disclosed values

Total value of deals with disclosed values ($m)

Average value of deals with disclosed values ($m)

1,014 1,039 4% ▲ 2% ▲

226 228 19% ▲ 1% ▲

$127,165 $127,220 91% ▲ 0% ▲

$563 $558 60% ▲ –1% ▼

PE





Corporate





YOY % change


• Tech and non-tech companies pursuing data troves to analyze for new revenue-generating opportunities.

• Tech-specialist PE firms increasing in number and gaining confidence to make opportunistic deals as equity markets fluctuate.

• Ongoing semiconductor consolidation.

• Geographic expansion in pursuit of growth, particularly from China, which pushed CB dealmaking to its second-highest value total ever (see Asia-Pacific and Japan (APJ) snapshot, page 14; and Cross-border value flow, page 18).

$127.2b2Q16


02Highlights


11Look ahead


23Methodology

23Source notes

18Additional charts

Figure 7: Global technology transactions value flow by sector, 2Q16 vs. 1Q16

1Q16

CE = Communications equipment; CPE = Computers, peripherals and electronics

Note: percentages may not total to 100% due to rounding.


2Q16

Buyer $127.2b

Target $127.2b

CPE12%

CE 4%

Semiconductors15%

IT services10%

Internet28%

Software/SaaS31%

IT services8%

Semiconductors9%

PE20%

Non-tech17%

Software/SaaS38%

CPE 2%CE 3%

Non-tech 1%

Internet4%

Buyer $66.7b

Target $66.7b

CPE24%

Semiconductors12%

Software25%

IT services21%

IT services30%

Internet6%

CPE14%

CE4%

Software/SaaS 5%

Non-tech25%

Non-tech10%

Semiconductors10%

PE11%

CE 1%

Internet 1%

Second quarter by the numbersDespite a larger number of big-ticket transformation deals, corporate tech buyers announced only one megadeal (above $10 billion) in 2Q16 vs. three in 2Q15. So, corporate tech’s disclosed value declined YOY, but PE and non-tech buyers morethan made up for the falloff.

• Aggregate value of $127.2 billion in 2Q16 bested 2Q15 by $55 million — though both quarters round to the same value (see Figure 6, page 5). Only 4Q15 ($189.8 billion) and 1Q00 ($228.4 billion) posted higher values.

• Breaking out the corporate buyer deal values in Figure 6 between tech and non-tech, we see corporate tech buyers fell 21% YOY to $80.2 billion in 2Q16. Non-tech buyers’ aggregate value jumped 95% over 2Q15 to $21.3 billion — their highest quarterly total ever.

• A 2Q16 YOY shift to higher-value deals appeared not only in the record 28 big-ticket deals, but also in midsize deals ($100 million to $1 billion). Midsize deal volume rose 32% to 75 deals, and their aggregate value increased 27% to $25.6 billion.

• Even small deals (below $100 million) participated in the shift: their volume fell 19% YOY, but aggregate value rose 18% to $3.9 billion, indicating a higher average value. Overall, average value fell 1% YOY due to 2Q15’s multiple megadeals.

• At 1,039 deals, volume rose 4% sequentially and 2% YOY and was above 1,000 for the fourth time in the last five quarters. YTD, 2016 has seen 2,041 deals, 2% ahead of 2015’s post- dotcom-record pace (only the year 2000 had more deals).


02Highlights


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23Methodology

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18Additional charts

$25.7b2Q16

Highest PE value quarter on recordincreasing 242% sequentially and 79% YOY

Source: EY analysis of Capital IQ data, accessed 28 July 2016.

Top 10

Next 15

2Q14

$817

$263

$554

3Q14 4Q14 1Q15

2% 2%

2% 3%

2% –1%

$830

$267

$563

$844$872

$264

$5804%

3%

2%

4%

6%

10%$270

$602

2Q15 3Q15 4Q15

$923

$297

$626 4%

3%

2%

$953

$303

$650 4%

3%

2%

$981

$308

$673

1Q16 2Q16

4%

4%

3%

$1,020$1,055

$318

$7022%

3%

7% $340

$715

Figure 8: Aggregate cash and short- and long-term investments for the top 25 technology companies, 2Q14–2Q16 ($b)

• Corporate tech buyer volume actually declined by 3% YOY to 785 deals, while non-tech buyers rose 28% YOY to 159 deals and PE buyers rose 23% to their second-highest total, 95 deals (only 3Q10 was higher, at 99 deals).

• YTD, non-tech buyers are 27% ahead of their 2015 pace in volume (306 deals vs. 241 in 2015) and 25% in value ($38 billion vs. $30.5 billion).

• The tech M&A volume increase was out of sync with the NASDAQ Composite Index (it fell 1% during 2Q16) for the second consecutive quarter. Historically, the NASDAQ and tech M&A deal volume almost always move up or down together.

Twenty-eight big-ticket dealswith an aggregate value of$97.8b breaks prior recordset in 4Q15.


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23Methodology

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18Additional charts

Tech companies accelerate ongoing transformations via M&ALarge incumbent tech companies pursuing transformation drovesome of the biggest disclosed-value deals of 2Q16.

• Microsoft’s $26.2 billion pending megadeal for LinkedIn remindsus of how signficantly social networking is transforming not only individual behavior, but also enterprise operations. Besidesacquiring the top social network for the enterprise, the deal envisions integration of LinkedIn’s deep data troves on the attributes of millions of professionals with Office 365 and Dynamics, Microsoft’s customer relationship management (CRM) offering. According to Microsoft CEO Satya Nadella, itmakes possible “new experiences such as a LinkedIn newsfeedthat serves up articles based on the project you are working onand Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete.”1 By acquiringLinkedIn, Microsoft also obtains an advanced ad-serving platformand video learning technologies (LinkedIn acquired Lynda.com in 2Q15 for $1.5 billion).

• The continuous nature of tech transformation driven by digitaltechnologies was also apparent in the $6 billion “spin-merger” of the Enterprise Services division of Hewlett Packard Enterprise(HPE) to Computer Sciences (see Americas snapshot, page 12).

• The changing nature of cybersecurity — and its growing importance —was exemplified by Symantec’s pending $4.7 billion deal for Blue Coat Systems. Blue Coat provides hardware, software andSaaS for enterprise web content filtering, anti-data leakage andanti-malware, including mobile devices. It was taken private in1Q15 for $2.4 billion.2

Non-tech companies also pursue digital transformations Several big-ticket 2Q16 deals showed how disruptive digital technology is transforming non-tech markets. Of note, some deals involved non-tech companies entering tech markets via M&A,while in others, non-tech companies divested tech business units.

• KION Group, a German maker of forklifts and warehouse equipment, would enter the market for e-commerce-related automated warehouse technology with its plan to acquire US-based Dematic (see Europe, the Middle East and Africa(EMEA) snapshot, page 16).

• Chinese household appliances maker Midea would expand into robots, automation equipment and smart-home devices with its deal for Germany’s KUKA (see APJ snapshot, page 14).

• French energy company Total pursued a broader solutions offering with its announced plan to acquire a domestic provider of advanced battery technology for $1.1 billion.

• There were two big-ticket tech divestitures by non-tech companies. US-based Walmart sold its Yihaodian Chinese e-commerce marketplace to China’s JD.com,* as part of a broad-based offline and online alliance for the Chinese market,3

and German travel business TUI Group sold its Hotelbeds wholesale online booking platform to a PE consortium (see EMEA snapshot, page 16).

*See Figure 19, page 22 for deal specifics.


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IoT and big data analytics lead growth of disruptive digital technology deal targetsIoT and big data analytics were the highest-growth disruptive technology targets from a volume perspective in 2Q16, though all the disruptive digital technologies we follow continued to drivesignificant M&A volume and value.

• IoT volume rose fastest in 2Q16: 28% YOY to 50 deals. Seven ofthe quarter’s eight connected car deals involved IoT technology(including mapping and tracking technologies), with total disclosed value of $1.5 billion. Six deals also targeted IoT securitytechnology. In all, IoT disclosed value remained flat YOY in 2Q16at $3 billion. No deals made the top 28 big-ticket deals’ list.

• Though not IoT-focused, Brocade’s announced $1.5 billion dealfor Ruckus Wireless, provider of Wi-Fi systems to enterprises and service providers, touches on IoT. The deal is the latest of multiple solution-broadening deals that aim to accelerate Brocade’s “accumulation of market share in the next-generationnetwork market embodied by cloud, 5G and the Internet ofThings,” according to The 451 Group research. (The 451 Groupprovides the data for our M&A update reports — see Methodology,page 23.)

• The number of deals targeting big data technology rose 13% YOYto 101 deals in 2Q16. Second-quarter disclosed value dipped18% to $5.9 billion. Two deals made the top 28 big-ticket deals,both acquired by PE firms: QlikTech ($3 billion; data visualizationtools) and Sitecore ($1.1 billion; customer experience analytics).

• Security deal volume is down this year, but value is up, demonstrating the shift to higher-value deals. It’s down 16% in 2Q16 to 74 deals. Disclosed value is up 62% for the quarter to $6.8 billion. Symantec-Blue Coat was the only security dealamong the top 28 big-ticket deals. We noted a large number of lower- and undisclosed-value deals targeting identity accessmanagement and authentication technologies.

• Gaming deal volume rose 11% in 2Q16, but value was the bigstory largely due to the $8.6 billion Tencent-Supercell deal. Disclosed value rose 283% for the quarter to $9.7 billion.

• Among other disruptive tech targets, cloud/SaaS and HIT wereup in both volume and value, even though no HIT deals wereamong the top 28 big-ticket deals. Advertising and marketingwas down in both. Payments and financial services was up in volume but down in value, and smart mobility was down in volume but up in value. As noted in prior quarters, many HIT andadvertising and marketing deals included analytics technology.

Semiconductor companies broaden solutions through consolidation For nearly two years now, we’ve traced the evolution of a trend we call “stack to solution,” in which tech companies’ acquisitionstrategies aim to build broader end-to-end solutions in responseto demand from cloud-era customers. In 2Q16, we saw evidence of the trend in semiconductor consolidation.

• In the second-largest 2Q16 semiconductor consolidation deal,ASML’s $3.1 billion plan to acquire Hermes Microvision, ASMLwould broaden its solutions by adding pattern verification technology to its line of chip-manufacturing equipment.

• Similarly, Cavium’s $1.4 billion deal for QLogic broadens thebuyer in the markets for components used in data center andstorage systems.

• The quarter’s largest semiconductor deal was a $4.3 billionmerger of two chip-packaging rivals both based in Taiwan (see APJ snapshot, page 14).

Semiconductor consolidation driven by stack-to-solution trend.


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Incumbent tech’s hidden gems drive growing divestiture volumeLarge incumbent tech companies that continue to scale down theirfocus drove divestitures to slightly more than 175 deals in 2Q16,up 17% sequentially and 35% YOY, and the highest volume levelwe’ve seen yet. Buyers mainly sought hidden gems within their ownsectors, but PE and non-tech buyers also acquired divested units.

• Disclosed value remained steady at $16.7 billion in 2Q16, thesame total as 1Q16. Three deals rose above $1 billion, includingtwo with Chinese buyers (NXP’s Standard Products business unitand Walmart’s Yihaodian e-commerce marketplace).

• Software divestitures contributed nearly 40% of the total, but IT services targets contributed 53% of divestiture value ($8.9 billion).

• The former “HP” appeared to be the most active divestor in2Q16. HPE divested two businesses: its Enterprise Services division and Mphasis India-based IT services business (see Americas snapshot, page 12). HP Inc. divested two more: customer communication software and customer experienceservices, both to web content management company OpenText.

• Dell divested its Software Products Group for an undisclosedamount to a PE firm and an activist hedge fund. The division includes security as well as database and analytics, as it combinestwo 2012 Dell acquisitions: Quest Software for $2.4 billion in2Q126 and Sonicwall in 1Q12 for an undisclosed amount.7 n

PE firms acquire disruptive tech on market dipsOur In the crosshairs top-of-mind report talks about how incumbent tech companies can find themselves a target of activistinvestors and disruptive technology start-ups as their core businessesare overshadowed by hot new disruptive digital technologies andnew business models.4 But given the high level of equity marketvolatility so far in 2016, even digital disruptor companies have experienced steep and sudden valuation fluctuations — and PE firmshave become quick to buy when such opportunities arise. In 2Q16,they set a new all-time value record.

• Overall, $25.7 billion in disclosed-value tech deals by PE buyersmade 2Q16 the highest-value PE quarter on record — if only by$85 million. Disclosed value for 1Q13 — the quarter Dell Inc. wastaken private — now ranks second, at $25.6 billion. At 95 deals,2Q16 was the second-highest-volume PE quarter, falling just shyof 3Q10 (99 deals).

• Nine PE deals above $1 billion were among the top 28 big-ticketdeals,with the largest being a $3.6 billion take-private of Autohome, a Chinese online automotive marketplace listed in the US. Second-largest was the QlikTech deal already mentionedand third was NXP’s divestiture of its Standard Products businessunit for $2.8 billion (see APJ snapshot, page 14).

• Multiple targets acquired by PE firms for $1 billion or more sawsudden share price fluctuations in 2Q16, including QlikTech, Marketo and Cvent.5

• As usual, PE buyers focused heavily on cloud/SaaS targets, acquiring 39 with disclosed value of $6.9 billion. They also acquired a dozen big data targets ($5 billion in disclosed value),9 advertising and marketing targets ($3.1 billion) and 10 payment and financial services targets ($891 million).

“Expect PE dealmaking to remain at a high level as more capital flows into tech-targeted funds. In addition to mature businesses, tech-focused PE firms are prepared to respond fast when themarket penalizes high-flying disruptive digital technology businesses experiencing short-termgrowth rate shortfalls — as we saw in the second quarter.”

Ron MurphyTransaction Advisory Services EY San Francisco Bay Area

Look aheadDigital disruption virtually guarantees ongoing tech M&A strength Judging by the first half of 2016, it appears that neither wild equity market volatility norgeopolitical uncertainty nor activist investors’ focused scrutiny can stay global technologyM&A dealmaking from continued growth. In fact, they’re likely contributing.

Everyone clearly sees that the massive digital transformations caused by disruptive cloud,mobile, social and big data analytics technologies are affecting all industries — and are justbeginning. So, when valuations fall steeply and suddenly, as they have at least twice so farthis year, tech buyers are ready and waiting. That helped drive 2Q16 to the third-highestvalue total ever for tech M&A and new all-time highs for PE, non-tech buyers and China. Andthose probably won’t be the last new records established this year. In the long run, disruptivedigital technology has nowhere to go but up.

Because the technology industry is in such major transformation, we expect 2016technology M&A to continue at a record or near-record pace for the foreseeable future,driven by the disruptive digital technologies that the industry is itself bringing to market.Tech companies will continue turning to M&A to accelerate their transformations and to buildend-to-end solutions. Some will continue going private to manage their transformationsaway from public-market scrutiny. Non-tech companies will increasingly acquire tech, drivingup cross-industry blur — and all will pursue security technologies.

In this context, we again suggest that technology executives test their organizations against these questions:

• Are we positioned to offer customers true solutions, or even answers, as opposed to just a point offering in the overall technology stack?

• Is there a “hidden gem” among our business units and other departments with the potential to drive greater value?

• Has disruptive technology placed our organization “in the crosshairs” of some upstart companies or of activist investors?

• Are we doing all we can to provide comprehensive security in our offerings?

It may not be overstating things to say digital technology is becoming likeelectricity, water or oxygen. But the fact is, companies can’t survive without it. Expect global technology M&A to match or surpass last year’s record pace by the end of the third quarter.”

Jeff Liu EY Global Technology Industry Leader Transaction Advisory Services

“


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2Q16 aggregate deal value soars 91% sequentially and tops 2Q15 by less than 1% to become the third-highest tech M&A quarter ever by value.

$127.2b


After dipping in the first quarter, Americas disclosed value rebounded in 2Q16 due largely to big-ticket transformative deals.Americas buyers accounted for more than 60% of global deal volume and even higher percentages of deals focused on HIT,cloud/SaaS, social networking, online video, security, big data analytics and connected cars.

• Cloud and internet security drove the third-largest deal. In acquiringweb-based security provider Blue Coat Systems, Symantec is furtherdiversifying beyond PC security software. Security drove nearly 50Americas deals, or nearly two-thirds of global security deal volumeand 89% of disclosed value.

• Americas buyers acquired 77% of global big data analytics volumeand 80% of disclosed value, including one top five transaction: thePE deal for QlikTech, which makes enterprise data-visualization tools.

• Several HIT deals also included an analytics focus, as US healthcare companies seek to improve performance and reduce costthrough digital transformation. HIT was noted as a factor driving 56 Americas deals, representing 82% of global HIT volume.

• IoT factored into 29 Americas deals, or 58% of global IoT volume.Several focused on connected-car technology; other targets included security, wearable technology and home automation.

• Of note, we counted 18 Americas deals that included an elementof artificial intelligence or machine learning, in some cases combined with a focus on analytics. They included deals focusedon visual processing for image analysis, technology-assisted driving and other applications.

• Non-tech buyers accounted for 13% of Americas volume and 11% of value — a bit less than global non-tech volume and value(15% and 17%, respectively). They included one top five deal(Thermo Fisher Scientific’s deal for FEI). n

• Americas disclosed value fell 14% YOY but rose 120% sequentially,mostly due to 13 deals at or above $1 billion that summed to$57.4 billion. Those deals represented 79% of Americas 2Q16 aggregate value. Americas buyers accounted for 57%of 2Q16 global value, higher than 50% in 1Q16 but below 73% in full-year 2015.

• Volume fell 2% YOY and 1% sequentially to 655 deals. Americasbuyers captured 63% of global volume, compared with 66% in1Q16 and 64% in full-year 2015.

• Americas PE value soared 141% sequentially and 359% YOY to$12.4 billion, including four $1 billion-plus deals.

• The three largest deals reflected US tech companies’ continuingbusiness transformation driven by disruptive digital technology.The region’s largest deal, Microsoft-LinkedIn, is discussed in themain narrative on page 8.

• The second-largest Americas deal was a divestiture described as a“spin-merger.” HPE, one of the two companies formed by last year’ssplit of Hewlett-Packard Company, is spinning off its EnterpriseServices division and merging it with CSC in a 50-50 joint venture.1

The merged company will have annual global services revenue ofapproximately $26 billion.2 The deal enables HPE to sharpen itsfocus on “end-to-end infrastructure solutions necessary to powerthe enterprise cloud and mobility.”3 Also in 2Q16, HPE divested itsmajority share in India-based IT services firm Mphasis Ltd. to a PEfirm in an $825 million deal.

YOY growth in Americas PE deal value

359%

*Ernst & Young Capital Advisors, LLC (EYCA) is a registered broker-dealer and member of FINRA (finra.org) providing sector-specific advice on M&A, debt capital markets, equity capital markets and capital restructuring transactions. It is an affiliate of Ernst & Young LLP, a member firm of Ernst & Young Global Limited serving clients in the US.

“Major M&A transactions by Americas tech companies reflect their commitment to adapt and transform their business as disruptive megatrends reshape the technology landscape.”

David Hedley US Technology M&A Leader Ernst & Young Capital Advisors, LLC*

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Regional snapshot

Americas


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Figure 9: Top five Americas deals (corporate and PE), 2Q16

Disclosed Premium Buyer Target value ($m) Announced Deal type offered

Microsoft Corporation

Computer Sciences Corporation

Symantec Corporation

Thermo Fisher Scientific, Inc.

Thoma Bravo LLC

LinkedIn Corporation

Enterprise Services division of Hewlett Packard Enterprise

Blue Coat Systems, Inc.

FEI Company

QlikTech, Inc.

$26,200 13 Jun Corporate 54%

$6,000 24 May Corporate N/A

$4,650 12 Jun Corporate N/A

$4,392 27 May Corporate 18%

$3,000 2 Jun PE -3%


Figure 10: Americas transactions scorecard, 2Q16


616 592 0% ▼ –4% ▼

106 91 25% ▲ –14% ▼

$81,667 $60,373 116% ▲ –26% ▼

$770 $663 73% ▲ –14% ▼

55 63 –5% ▼ 15% ▲

12 14 –22% ▼ 17% ▲

$2,698 $12,390 141% ▲ 359% ▲

$225 $885 211% ▲ 293% ▲

Corporate and PE





671 655 –1% ▼ –2% ▼

118 105 15% ▲ –11% ▼

$84,365 $72,763 120% ▲ –14% ▼

$715 $693 90% ▲ –3% ▼

PE





Corporate





YOY % change


APJ volume and value rose to record levels as Chinese buyers outspent all other countries in CB deals. Cloud/SaaS, mobility,advertising and marketing, and gaming drove many deals.

Regional snapshot

Asia-Pacific* and Japan (APJ)

automation equipment and smart-home devices.3 The dealwould be China’s biggest acquisition by dollar value of a Germantarget to date, in any industry.4 Including this deal, APJ non-techbuyers accounted for 19% of APJ volume and 20% of value.

• Two semiconductor deals made the top five. The largest is amerger of two Taiwanese chip-packaging companies, AdvancedSemiconductor Engineering and Siliconware Precision Industries.In the other, a Chinese PE group is buying the Standard Productsbusiness unit of Netherlands’ NXP Semiconductors, which hasbeen divesting assets as it focuses on its high-performancemixed-signal business. In all, there were 15 APJ deals targeting semiconductors, representing 26% of APJ value.

• India had the second-largest volume of deals, with 37 transactions but a disclosed value of only $358 million. Most were in-border (IB) deals with no disclosed value, many of them targeting mobile app developers or online businesses.

• Australia had 24 deals with $1.3 billion disclosed value, about half of them including a cloud/SaaS focus.

• Japan had 10 deals and $64 million in value.

• Advertising and marketing technology factored into about 20 deals, including the acquisition by a Chinese marketing group of a German mobile ad exchange, in part to help it expand overseas. n

• Figure 12 (page 15) tells the story: all arrows are green andpoint up. APJ volume and value both reached the highest levelswe’ve seen since breaking out regional data six years ago. Disclosed value soared 263% YOY to $39.5 billion, comparedwith the global average of zero growth. Volume grew 17% YOY,compared with the global average of 2%.

• China again drove the region’s value and volume growth. China’s disclosed value rose 247% YOY to $32.3 billion in 2Q16,representing 82% of all APJ disclosed value. Chinese buyers accounted for eight of the nine deals valued at $1 billion ormore. China’s deal volume rose 112% YOY to 53 deals, representing 36% of APJ 2Q16 volume.

• China’s growth in CB technology transactions was even moredramatic, reflecting a larger cross-industry trend in which Chinahas become the world’s top CB acquirer by value to date thisyear1 (see Cross-border value flow, page 18).

• Mobile gaming drove the region’s largest deal. China’s Tencent is leading a group acquiring Finland’s mobile game developer Supercell from Japan’s SoftBank Group and Supercell’s currentand former employees. Tencent, already the world’s top video game company by revenue,2 would gain a bigger share of the growing mobile gaming market worldwide. Including this deal, APJ mobility-related deals accounted for about 22% of global mobility deal volume and 54% of value.

• Advanced robotics was the focus of the top five deal by Chinese household appliances maker Midea for Germany’sKUKA. The non-tech buyer said the deal is aimed at improving its manufacturing operations and expanding into robots,

YOY increase in APJ disclosedvalue for 2Q16

263%“China’s intensive CB M&A activity reflects both the rapid growth of its technology sector and the country’s broader cross-sector trend towardglobalization for overseas growth.”

Ben KwanTransaction Advisory Services Technology, Media & Telecommunications (TMT) Market Segment LeaderEY Greater China

*Asia-Pacific includes India.

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Tencent Holdings Limited

Midea International

Advanced Semiconductor Engineering, Inc.

Hillhouse Capital Management, Ltd.; Sequoia Capital China; Boyu CapitalConsultancy Co. Ltd.

Beijing JianGuang Asset ManagementCo. Ltd.; Wise Road Capital Ltd.

Supercell OY

KUKA AG

Siliconware Precision Industries Co. Ltd.

Autohome, Inc.

Standard Products business unit of NXP Semiconductors NV




$3,570 18 Apr PE 12%

$2,750 14 Jun PE N/A

Figure 11: Top five APJ deals (corporate and PE), 2Q16

Figure 12: APJ transactions scorecard, 2Q16


118 135 13% ▲ 14% ▲

38 56 6% ▲ 47% ▲

$5,005 $29,214 8% ▲ 484% ▲

$132 $522 3% ▲ 295% ▲

7 11 175% ▲ 57% ▲

6 7 75% ▲ 17% ▲

$5,870 $10,254 390% ▲ 75% ▲

$978 $1,465 180% ▲ 50% ▲

Corporate and PE





125 146 19% ▲ 17% ▲

44 63 11% ▲ 43% ▲

$10,874 $39,468 36% ▲ 263% ▲

$247 $626 23% ▲ 153% ▲

PE





Corporate





YOY % change

Note: numbers may not add to totals due to rounding.



EMEA volume growth outpaced the global average, while disclosed value rose sequentially but fell YOY. Non-tech buyersacquired 38% of EMEA disclosed value. Cloud/SaaS, mobility, payments and financial services, big data analytics, advertisingand marketing, and security technologies drove many deals.

Regional snapshot

Europe, the Middle East and Africa (EMEA)

• Another top five deal focused on e-commerce propelled growthin automated logistics. Germany’s KION Group, a maker of forklift trucks and warehouse equipment, is broadening its supply-chain offerings by buying US-based Dematic, a maker of equipment and software for automating warehouses and distribution centers for e-commerce companies, as well as brick-and-mortar firms.

• Cloud/SaaS factored into nearly 24% of EMEA deals. The largestincluded advertising and marketing technology enhanced withbig data analytics: the top five deal by a Swedish PE group to acquire Sitecore, a Danish customer experience managementsoftware company.

• In another top five deal, a PE group acquired wholesale onlinehotel-room booking business Hotelbeds Group (a so-called “bedbank”) from German travel company TUI Group for $1.3 billion.

• EMEA buyers captured 32% of global IoT volume. Targets included makers of machine vision technology, wearables andsmart household appliances.

• Payments and financial services technology drove about 9% ofEMEA deal volume and 8% of value, including one top five dealtargeting an Italian bank-owned payments processing platform.

• As usual, the UK acquired the most deals of any EMEA country.The UK’s 77 deals represented 32% of EMEA volume. France had30 deals, representing 13% of EMEA volume, while Sweden had21 (9%) and Germany had 20 deals (8%). n

• EMEA volume grew 9% YOY and sequentially, faster than theglobal average of 2% and 4%, respectively. EMEA’s 238 deals represented 23% of global deal volume.

• Disclosed value fell 53% YOY from 2Q15, which included amegadeal over $10 billion. But at $15 billion, 2Q16 value rose231% sequentially after three successive declining quarters.That sequential increase was primarily due to big-ticket deals:while 1Q16 had no EMEA deals greater than $1 billion, 2Q16 included six totaling $9.9 billion.

• Non-tech buyers captured 49 deals and $5.7 billion in disclosedvalue, including 3 $1 billion-plus deals. Deals by non-tech buyersrepresented 21% of EMEA deal volume and 38% of value — representing the highest percentages of non-tech dealmaking in any region.

• Big-ticket deals mostly targeted other EMEA companies, contrasting with the recent pattern in which EMEA buyers targeted US companies for their technology and growthprospects (see Cross-border value flow, page 18).

• The largest EMEA deal reflected continuing semiconductor consolidation, as companies face intense competition and risingdevelopment costs. Semiconductor manufacturing equipmentmaker ASML announced plans to acquire Taiwan-based HermesMicrovision, which makes pattern verification systems used tofind chip defects. The companies’ combined technologies mayhelp customers develop future chip generations with evensmaller transistors (sub-10 nanometers).1

“To help drive their digital transformations, tech and non-tech EMEA companies are both focusing on acquisitions not only within Europe, but worldwide.”

Simon Pearson TMT Corporate Finance Leader, United Kingdom and Ireland Region (UKI)EY UKI

Non-tech buyers’ share of EMEA disclosed value

38%

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Figure 13: Top five EMEA deals (corporate and PE), 2Q16


ASML Holding NV

KION Group AG

Cinven/Canada Pension Plan Investment Board

Mercury UK Holdco Ltd.

EQT AB

Hermes Microvision, Inc.

Dematic Group

Hotelbeds Group

Setefi SpA and Intesa Sanpaolo Card d.o.o

Sitecore AS

$3,087 16 Jun Corporate 32%


$1,344 28 Apr PE N/A

$1,153 2 May Corporate N/A

$1,131 1 Apr PE N/A

Figure 14: EMEA transactions scorecard, 2Q16


203 217 10% ▲ 7% ▲

58 55 49% ▲ –5% ▼

$26,185 $11,953 181% ▲ –54% ▼

$451 $217 89% ▲ –52% ▼

15 21 –5% ▼ 40% ▲

6 5 –17% ▼ –17% ▼

$5,740 $3,036 1,000% ▲ –47% ▼

$957 $607 1,220% ▲ –37% ▼

Corporate and PE





218 238 9% ▲ 9% ▲

64 60 40% ▲ –6% ▼

$31,925 $14,988 231% ▲ –53% ▼

$499 $250 138% ▲ –50% ▼

PE





Corporate





YOY % change

Note: numbers may not add to totals due to rounding.


China’s CB deal makers acquired 57% ($21.3 billion) of 2Q16’s total CB disclosed value of $37.4 billion — the second-highest CB value total on record. That 2Q16 total was an increase of 68% sequentially but a 14% decline YOY from the record total of $43.6 billion set in 2Q15. Meanwhile, US targets increased sequentially in popularity from a volume perspective, but valuetumbled by nearly half.

• China’s 2Q16 CB value total is nearly five times the $4.2 billion it posted in 2Q15. YTD, it has increased by a multiple of four (to $30.2 billion in 1H16 versus $7.7 billion in 1H15). China’sdramatic CB growth reflects a larger trend in which China has become the world’s top CB buyer by value so far this year acrossall industries.1 If it finishes the year in first place, it would be thefirst time the US hasn’t led (for all industries) since 2007.

• China pursued mostly US targets in 1Q16.2 But in 2Q16, 81%($17.3 billion) of China’s CB tech value came from European targets, including three big-ticket deals valued at $8.6 billion,$4.7 billion and $2.8 billion (see Figure 5, page 4). China buyersacquired 66% of the total $26 billion European value sold acrossborders; other European buyers acquired nearly all the rest($7.4 billion, or 28%).

• European buyers also moved away from US targets, at least froma value perspective. In 2Q16, US targets accounted for just 11%of EMEA value, compared with 45% in 1Q16. However, US targetsaccounted for slightly more EMEA deal volume: 20% in 2Q16,compared with 19% in the previous quarter.

• In fact, the volume of deals targeting US tech companies rose17% sequentially to 84 deals in 2Q16. That made US companiesthe leading CB volume target, followed by UK companies (62deals), German (24 deals) and Canadian (22 deals). The valueof US targets was only $5.3 billion in 2Q16. China acquired 54%of that, most of which came in one $2.5 billion deal.

• The US has had unusually low CB value totals this year, acquiring$2.2 billion in 2Q16 (approximately one-tenth of China’s total)and $5.7 billion YTD.

• In all, there were 10 CB deals at or above $1 billion in 2Q16, with disclosed value of $28.4 billion (76% of CB total value). APJ buyers accounted for five of them, including China’s three.

• European buyers acquired the other five big-ticket CB deals, with a total value of $8.8 billion. n


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Cross-border value flowChina drives CB value growth;switches from US to European targets



2Q16

Figure 15: Cross-border deal value flow for technology deals (disclosed value), 2Q16

CB value acquired $37.4b

CB value sold $37.4b

Other 2%Canada 2%

India 3%

US6%

Europe30%

US14%

Europe70%

Asia-Pacific59%

Asia-Pacific12%


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Figure 16: Global corporate and PE deals by acquiring country: cross-border and in-border, 2Q16

Corporate deals 2Q16

Top countries 2Q15 deals 2Q16 deals % total deals No. IB deals 0% 50% 100% No. CB deals

US 564 554 59% 440 114

UK 81 69 7% 40 29

China/HK 19 47 5% 32 15

Canada 47 35 4% 9 26

India 40 35 4% 29 6

France 30 27 3% 13 14

Australia 23 23 2% 19 4

Sweden 13 18 2% 3 15

Germany 15 18 2% 9 9

Switzerland 4 11 1% 1 10

Other 101 107 11% 34 73

Total 937 944 100% 629 315PE deals 2Q16

Top countries 2Q15 deals 2Q16 deals % total deals No. IB deals 0% 50% 100% No. CB deals

US 51 59 62% 53 6

UK 7 8 8% 3 5

China/HK 6 6 6% 2 4

Sweden 0 3 3% 2 1

Canada 2 3 3% 1 2

France 2 3 3% 1 2

Netherlands 1 2 2% 1 1

Germany 3 2 2% 1 1

India 1 2 2% 1 1

Other 4 7 7% 2 5

Total 77 95 98% 67 28

China’s ongoing dealmaking growth was the primary factor behind 2Q16’s 4% sequential rise in global technology M&A deal volume, accounting for 19 (or 51%) of theadditional 37 combined corporate and PE deals (see Figure 6, page 5). In all, Chinese corporate and PE buyers announced 53 deals, up from 34 last quarter. No other countryincreased by more than a single-digit number. Despite China’s headline-making CB deals, most of its growth came from IB deals (+12 IB deals vs. +7 CB). That reflected aslight weakness in overall CB volume: it dropped from 346 deals in 1Q16 to 343 (-1%), while global IB volume rose from 656 to 696 (+6%). Corporate CB volume dropped by 4deals sequentially, while an increase of 1 deal made 2Q16 the second-consecutive quarter in which PE firms posted their second-highest-ever number of CB deals (3Q10,with 34 CB deals and 99 PE deals overall, holds the volume record in both categories since we began these reports in 2008). The US remained the global volume leader in2Q16 with 59% (613 CB+IB deals). But again, that reflected IB growth and CB weakness: of an overall 5-deal sequential rise, IB volume rose 6%, or 27 deals, while CB volumefell by 15% (22 deals).




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Number of deals

2Q15 Sequential% change

2Q16 YOY % change

Average value ($m)


2Q16 YOY % change

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

2 6 500% ▲ 200% ▲

7 4 –60% ▼ –43% ▼

20 13 30% ▲ –35% ▼

21 20 –20% ▼ –5% ▼

3 3 N/A ▲ 0% −

24 49 7% ▲ 104% ▲

77 95 3% ▲ 23% ▲

$240 $2,000 N/A ▲ 733% ▲

$200 $2,509 682% ▲ 1,155% ▲

$512 $1,661 290% ▲ 224% ▲

$87 $452 1,955% ▲ 420% ▲

$1,850 $1,212 N/A ▲ –34% ▼

$737 $746 99% ▲ 1% ▲

$596 $988 269% ▲ 66% ▲

39 35 75% ▲ –10% ▼

66 82 8% ▲ 24% ▲

178 144 4% ▲ –19% ▼

261 270 –9% ▼ 3% ▲

23 40 82% ▲ 74% ▲

447 468 4% ▲ 5% ▲

1,014 1,039 4% ▲ 2% ▲

$1,109 $346 168% ▲ –69% ▼

$62 $612 –20% ▼ 887% ▲

$353 $1,118 482% ▲ 217% ▲

$244 $301 5% ▲ 23% ▲

$4,890 $745 44% ▲ –85% ▼

$234 $440 82% ▲ 88% ▲

$563 $558 60% ▲ –1% ▼

Figure 17: Global technology corporate and PE transactions by sector, 2Q16

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

Corporate deals

PE deals

Total deals

37 29 53% ▲ –22% ▼

59 78 18% ▲ 32% ▲

158 131 2% ▲ –17% ▼

240 250 –8% ▼ 4% ▲

20 37 68% ▲ 85% ▲

423 419 4% ▲ –1% ▼

937 944 4% ▲ 1% ▲

$1,154 $228 77% ▲ –80% ▼

$55 $530 –39% ▼ 864% ▲

$338 $1,063 586% ▲ 214% ▲

$269 $289 –14% ▼ 7% ▲

$5,498 $681 32% ▲ –88% ▼

$168 $378 74% ▲ 125% ▲

$559 $503 39% ▲ –10% ▼ �

Overall average value rebounded in 2Q16 (+60% sequentially and only -1% YOY) after dropping in 1Q16 to start the year, thanks largely to incumbents’ ongoing pursuit oftransformative deals. But 2Q16 had “only” one megadeal over $10 billion compared with three in 2Q15. Consequently, 2Q16 achieved its YOY near-parity through the sheervolume of its all-time record of 28 deals at or over $1 billion (though helped, of course, by the one $26.2 billion deal). At $558 million, 2Q16’s average value remains wellbelow the record $742 million set in 4Q15, which posted 20 deals at or over $1 billion and 3 over $10 billion (including 1 at $67 billion).

Volume grew in 2Q16 (+4% sequentially and +2% YOY), with most of the YOY rise coming from PE (PE deals increased by 18 deals YOY, compared with 7 for corporate). Froma sector perspective, software/SaaS contributed most to YOY volume growth in terms of number (+21 deals), although semiconductors (+17 deals) and CPE (+16 deals)contributed higher percentages. While CE volume declined by a modest 4 deals YOY, internet fell 34 deals (19%).



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Figure 18: Cross-border corporate and PE transactions by sector, 2Q16

Number of deals


2Q16 YOY % change

Average value ($m)


2Q16 YOY % change

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

0 2 N/A ▲ N/A ▲

1 3 –40% ▼ 200% ▲

6 5 67% ▲ –17% ▼

6 7 40% ▲ 17% ▲

2 3 N/A ▲ 50% ▲

5 8 –43% ▼ 60% ▲

20 28 4% ▲ 40% ▲

$0 $$0 N/A − N/A −

$0 $2,509 307% ▲ N/A ▲

$432 $1,344 89% ▲ 211% ▲

$6 $452 5,550% ▲ 7,433% ▲

$1,850 $1,212 N/A ▲ –34% ▼

$2,894 $810 139% ▲ –72% ▼

$1,480 $1,047 154% ▲ –29% ▼

17 15 114% ▲ –12% ▼

26 36 6% ▼ 38% ▲

64 47 4% ▲ –27% ▼

74 83 –10% ▼ 12% ▲

11 20 54% ▲ 82% ▲

143 142 –8% ▼ –1% ▼

335 343 –1% ▼ 2% ▲

$1,735 $25 –24% ▼ –99% ▼

$82 $863 –32% ▼ 952% ▲

$229 $324 77% ▲ 41% ▲

$623 $267 271% ▲ –57% ▼

$646 $551 288% ▲ –15% ▼

$241 $613 203% ▲ 154% ▲

$501 $505 50% ▲ 1% ▲

CE

CPE

Internet

IT services

Semiconductors

Software/SaaS

Total

Corporate deals

PE deals

Total deals

17 13 86% ▲ –24% ▼

25 33 14% ▲ 32% ▲

58 42 0% − –28% ▼

68 76 –13% ▼ 12% ▲

9 17 31% ▲ 89% ▲

138 134 –5% ▼ –3% ▼

315 315 –1% ▼ 0% −

$1,735 $25 –24% ▼ –99% ▼

$82 $658 –53% ▼ 702% ▲

$199 $196 155% ▲ –2% ▼

$671 $212 179% ▲ –68% ▼

$44 $353 149% ▲ 702% ▲

$58 $596 241% ▲ 928% ▲

$415 $420 29% ▲ 1% ▲ �

CB volume experienced a small sequential decline in 2Q16 despite much larger fluctuations among the various tech sectors. All except one reversed a sequential trend; onlyinternet rose from 4Q15 to 1Q16 and then again in 2Q16. A 13-deal sequential decline in software/SaaS CB deals was particularly reflective of 2Q16’s CB volume weakness,as software/SaaS IB volume increased by 31 deals sequentially for a net rise of 18 deals. CPE drove YOY growth with 10 more deals (+38%), while overall CB volumeincreased by just 8 deals. Semiconductors and CPE grew both sequentially and YOY, while software/SaaS declined in both periods. CB deals accounted for 33% of all-dealYOY volume.

CB average value, however, saw more growth. Of note, both CB and all-deal average value (see Figure 17, page 20) grew sequentially (50% and 60%, respectively). But the faster growth of all-deal average value widened the gap between the two from $13 million in 1Q16 ($333 million for CB and $349 million for all-deal) to $53 million ($505 million for CB and $558 million for all-deal). That did not erase all of the slow gains made by CB average value growth in the last year, as all-deal average value fell 1% YOY, while CB increased 1%. Nonetheless, 2Q16 was the fifth consecutive quarter in which CB average value remained below all-deal.



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*Original buyer was Mitel Networks Corporation.


Disclosedvalue ($m) Deal type

Multiple of TTM EV/ revenue

Multiple ofTTM EV/EBITDA

Premium offeredAnnounced

Salesforce.com, Inc.

Beijing JianGuang Asset Management Co. Ltd. and Wise Road Capital Ltd.

Apex Technology Co. Ltd./PAG Asia Capital et al

KION Group AG

Siris Capital Group LLC*

Vista Equity Partners

Vista Equity Partners

Brocade Communications Systems, Inc.

Leshi Internet Information & Technology Corporation

JD.com Inc.

Cavium, Inc.

Cinven/Canada Pension PlanInvestment Board

Mercury UK Holdco Ltd.

EQT AB

Rovi Corporation

Total SA

TransDigm Group, Inc.

Alibaba Group Holding Ltd.

Demandware, Inc.

Standard Products business unit of

NXP Semiconductors NV

Lexmark International, Inc. Dematic Group

Polycom, Inc.

Marketo, Inc.

Cvent, Inc.

Ruckus Wireless, Inc.

Le Vision Pictures Co. Ltd.

Yihaodian

QLogic Corporation

Hotelbeds Group

Setefi Services SpA and

Intesa Sanpaolo Card d.o.o.

Sitecore AS

TiVo, Inc.

Saft Groupe SA

Data Device Corporation

Lazada Group SA

$2,800 1 Jun Corporate 11.0x N/A 63%

$2,750 14 Jun PE 2.3x N/A N/A

$2,509 19 Apr PE 1.0x 12.9x 30% $2,100 21 Jun Corporate 1.8x 16.2x N/A

$2,000 15 Apr PE 1.6x 15.2x 3%

$1,790 31 May PE 7.9x N/A 60%

$1,650 18 Apr PE 8.0x 404.1x 66%

$1,500 4 Apr Corporate 3.2x 63.2x 47%

$1,489 9 May Corporate N/A N/A N/A $1,459 21 Jun Corporate N/A N/A N/A

$1,360 15 Jun Corporate 2.2x 11.4x 17%

$1,344 28 Apr PE 0.9x N/A N/A

$1,153 2 May Corporate N/A N/A N/A $1,131 1 Apr PE 5.2x 20.7x N/A

$1,100 29 Apr Corporate 1.6x 10.0x 10%

$1,083 9 May Corporate 1.3x 9.0x 40%

$1,000 24 May Corporate N/A N/A N/A

$1,000 12 Apr Corporate 3.6x N/A N/A

Buyer Target

Figure 19: Remainder of deals greater than or equal to $1 billion, 2Q16


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• Global technology M&A update: April-June 2016 is based on EY’s analysis of The 451 Group M&A KnowledgeBase data. Deal activity and valuations may fluctuate slightly based on the date the database is accessed.• Technology company M&A data was pulled from The 451 Group M&A KnowledgeBase based on the database’s own classification taxonomy, and then deals were aligned to the following sectors: CE, CPE, semiconductors, software/SaaS, IT services and internet companies. Alignment was based on the sector of the target company. • The data includes M&A transactions between two technology companies as well as non-technology companies acquiring technology companies.• Joint ventures were not included. • Corporate M&A activity data was analyzed based on the sector classification of the target company. Prior to 2012, we reported based on the classification of the acquiring company; the change enables a clearer picture of the technologies being focused on for acquisition.

• Equity investments that involved less than a 50% stake were not included in the data. • PE M&A activity includes both full and partial stake transactions in excess of 50% and was analyzed based on acquisitions by firms classified as private equity, sovereign wealth funds, investment holding companies, alternative investment management groups, certain commercial banks, investment banks, venture capital and other similar entities.• Unsolicited technology deal values were not included in the data set, unless the proposed bid was accepted and the deal closed based on data available at the time of analysis.• The value and status of all deals highlighted in this report are as of 30 June 2016, unless otherwise noted.• All dollar references are in US dollars, unless otherwise indicated.• In this report, disclosed deal values may vary from other published values because The 451 Group database methodology automatically subtracts cash acquired, net of debt, from enterprise value. Additionally, announced deal values are often subject to change at the time of close, due to

subsequent revisions to the terms of the deal and/or changing stock valuations to the extent stock was used as a deal consideration.• As used in this report, “total value” refers to the aggregate value of deals with disclosed values for the period under discussion.• Other definitions: • “TTM” stands for trailing 12 months. • “Multiple of EV/TTM revenue” is the transaction value multiple representing total enterprise value over trailing 12 months of target revenue. • “Multiple of EV/TTM EBITDA” is the transaction value multiple representing total enterprise value over trailing 12 months of target EBITDA (earnings before interest, taxes, depreciation and amortization). • “Premium offered” represents the percentage difference between the purchase price and the share price value 30 days prior to the announcement of the deal. Where data is unavailable from The 451 Group, premium data was accessed via Capital IQ. n

Methodology

Source notesVolume, value rise; multiple records set1 “Satya Nadella email to employees on

acquisition of LinkedIn,” Microsoft News Center, 13 June 2016, © 2016 Microsoft Corporation.

2 Global technology M&A update, January-March 2015, EY, © 2015 EYGM Limited.

3 “Walmart and JD.com Announce Strategic Alliance to Serve Consumers across China,” Walmart Press Release, 20 June 2016, © 2016Wal-Mart Stores, Inc.

4 In the crosshairs: private equity firms help techcompanies reinvent themselves, EY, © 2016EYGM Limited.

5 “Thoma Bravo Buys Qlik For $3B As PE BuyersScoop Up Busted Technology Stocks,” Forbes.com,2 June 2016, © 2016 Forbes.com LLC.

6 Global technology M&A update, April-June 2012,EY, © 2012 EYGM Limited.

7 Global technology M&A update, January-March2012, EY, © 2012 EYGM Limited.

Regional snapshot: Americas1 “Hewlett Packard Enterprise Announces Plans for Tax-Free Spin-Off and Merger of Enterprise Services Business With CSC,” HPE Press Release, 24 May 2016, © 2016 Hewlett Packard Enterprise Development LP.2 Ibid.3 Ibid.

Regional snapshot: APJ1 “Chinese Acquisitions of Foreign Firms Already at Full-Year Record,” The Wall Street Journal, 10 May 2016, © 2016 Dow Jones & Company, Inc.2 “Tencent Seals Deal to Buy ‘Clash of Clans’ Developer Supercell for $8.6 Billion,” The Wall Street Journal, 21 June 2016, © 2016 Dow Jones & Company, Inc.3 “China’s Midea Offers $5 Billion for German Robot Maker Kuka,” The Wall Street Journal, 18 May 2016, © 2016 Dow Jones & Company, Inc.4 Ibid.

Regional snapshot: EMEA1 “ASML to Acquire HMI to Enhance Holistic Lithography Product Portfolio,” ASML Press Release, 16 June 2016, © 2016 ASML Holding NV.

Cross-border value flow1 “Chinese Acquisitions of Foreign Firms Already at Full-Year Record,” The Wall Street Journal, 10 May 2016, via Factiva, © 2016 Dow Jones & Company, Inc.2 Global technology M&A report, January-March 2016 final look, EY, © 2016 EYGM Ltd.

Ranjan BiswasIndia+91 806 727 5131 [email protected]

Tim DuttererCo-Leader Technology, Parthenon-EY+1 415 264 [email protected]

Staffan EkströmGlobal Telecoms Leader —Transactions andTMT Leader, Nordics+46 8 520 593 90 [email protected]

Arjan Groen Operational Transaction ServicesNetherlands +31 884 071 087 [email protected]

David HedleyUS Technology M&A Leader+1 415 984 7128 [email protected]

Neil HuttUnited Kingdom+44 1189 281535 [email protected]

Ben KwanTAS and TMT Market Segment LeaderGreater China+852 2849 9223 [email protected]

Ron MurphyTransaction Advisory Services EY San Francisco Bay Area+1 415 894 [email protected]

Simon PearsonUnited Kingdom+44 20 7951 0418 [email protected]

Barak RavidCo-Leader Technology, Parthenon-EY+1 415 894 [email protected]

Dr. Carsten F. RischGermany+49 30 25471 21426 [email protected]

Eric SanschagrinTMT Transaction Advisory, EMEIA +44 207 951 9650 [email protected]

EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services.The insights and quality services we deliver help build trust and confidencein the capital markets and in economies the world over. We developoutstanding leaders who team to deliver on our promises to all of ourstakeholders. In so doing, we play a critical role in building a better workingworld for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of themember firms of Ernst & Young Global Limited, each of which is a separatelegal entity. Ernst & Young Global Limited, a UK company limited byguarantee, does not provide services to clients. For more informationabout our organization, please visit ey.com.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisorsfor specific advice.

About EY’s Global Technology SectorEY’s Global Technology Sector is a global network of more than 21,000technology practice professionals from across our member firms, all sharingdeep technical and industry knowledge. Our high-performing teams arediverse, inclusive and borderless. Our experience helps clients grow, manage,protect and, when necessary, transform their businesses. We provideassurance, advisory, transaction and tax guidance through a network ofexperienced and innovative advisors to help clients manage business risk,transform performance and improve operationally. Visit us atey.com/technology.

Ernst & Young Capital Advisors, LLC (EYCA) is a registered broker-dealer andmember of FINRA (finra.org) providing sector-specific advice on M&A, debtcapital markets, equity capital markets and capital restructuring transactions. It is an affiliate of Ernst & Young LLP, a member firm of Ernst & Young GlobalLimited, serving clients in the US.

Global Technology Sector

Greg CudahyEY Global Leader — TMT Technology, Media & Entertainment and Telecommunications+1 404 817 [email protected]

Technology service line leaders

Jeff Liu EY Global Technology Industry Leader Transaction Advisory Services +1 415 894 8817 [email protected]

Channing Flynn EY Global Technology Industry Leader Tax Services +1 408 947 5435 [email protected]

Dave Padmos EY Global Technology Industry Leader Advisory Services +1 206 654 6314 [email protected]

Guy Wanger EY Global Technology Industry Leader Assurance Services +1 650 802 4687 [email protected]

Transaction Advisory Services (TAS)key technology contacts

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