US tech acquisitions: Old-school giants join fray
Industrial stalwarts such as General Motors and General Electric are among the non-tech corporations acquiring such startups
San Francisco
FOR years, mergers and acquisitions in technology were fairly straightforward: Every investment bank kept a list of a dozen or so companies such as Google and IBM that had a track record of acquisitions and cash to deploy. When the time and price were right, bankers would seek to match the tech giants with a startup, and a deal would be hatched.
Now, the technology deal-making club has had its doors blown wide open.
All kinds of companies, including century-old industrial stalwarts such as General Motors and General Electric, are among the corporate giants acquiring tech startups of late.
This trend, of course, reflects how new technology is radically changing many traditional businesses. Developments such as connected homes and driverless cars are upending old models. Many companies have come to the realisation that building technology in-house was a painstaking process that often meant getting leapfrogged by startups.
Companies not usually thought of as being in the tech sector have become more aggressive, making more than US$125 billion worth of acquisitions in 2016, the most ever. Five years ago, that figure was US$20 billion.
The examples span industries. Walmart purchased the e-commerce startup Jet.com, while General Electric agreed to buy ServiceMax, whose software provides information about off-site workers and equipment repairs. Roper Technologies, another century-old industrial conglomerate, signed a deal with Deltek, an enterprise-software provider. Carmakers from General Motors to Daimler have taken large stakes in ride-hailing applications, including Lyft and Hailo.
Last year, the number of technology companies sold to non-tech companies surpassed those acquired by tech companies for the first time since the Internet era began, according to data compiled by Bloomberg. Excluding private equity buyers, 682 tech companies were purchased by a company in an industry other than technology, while 655 were acquired by tech companies, Bloomberg's data showed.
More broadly, merger activity was down in 2016. Companies around the world announced US$3.6 trillion worth of deals last year, a decline of 16.6 per cent from 2015, which was a record year, according to data compiled by Thomson Reuters. The number of deals signed rose slightly from 2015, the data showed. NYTIMES
