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The world of digital M&A

A Freshfields study

Technology is transforming the way businesses work and the products and services they offer. Many companies see M&A as the best – or at least the fastest – way to build their digital capabilities, and the heat is being turned up by the need to keep pace with competitors and to buy out emerging threats.

To assess the impact of these forces on the M&A activity of the world’s biggest companies, we analysed all 26,744 deals announced by the current constituents of the S&P Global 1200 between 1 January 2009 and 31 December 2017.

Of those transactions we classed 3,955 as ‘digital/tech’ – that is, deals whose principal rationale was to further the acquirer’s digital transformation, bolster its technology offering or consolidate the market in a particular class of tech. We defined a deal as any transaction in which the acquirer:

  1. took an interest of 50 per cent or more in the target;
  2. increased its interest from below 50 per cent to above 50 per cent; or
  3. acquired the remaining interest in an asset it didn’t already own.

Our digital/tech deal set includes all acquisitions of technology, technology businesses and technology assets by some of the world’s most sophisticated investors. The results reveal the scale of their digital investment, highlight the sectors and countries that are receiving the highest levels of backing, pinpoint the countries where digital business is thriving – and show how technology is reshaping the global M&A landscape.

Our study explained

Why the S&P Global 1200?

The constituents of the S&P Global 1200 are the world’s biggest public companies. Together they comprise around 70 per cent of global market capitalisation. The index includes representatives from every industry and every major economy, and is therefore the ideal proxy for ‘big’ and ‘global’ business. While our study does not consider private companies, state-owned enterprises or corporate investment vehicles such as the Vision Fund or Google Ventures it nevertheless provides a broad representative base from which to analyse digital/tech deal activity.