Tech M&As set to expand strongly in 2018

PE investments to boost increased M&A transactions, report says

Technological mergers and acquisitions are expected to grow strongly next year with increased transactions boosted by private equity investments, according to a report from Morrison & Foerster.

Despite the 15 percent slowdown in global tech and telecommunication M&A activity compared to the same time in the two previous years, technological acquirers have largely kept their bullish forecast, with over half of the survey's respondents including corporate or M&A executives, investment bankers and lawyers, venture capital and PE experts forecasting a pickup over the next year.

"The bullish forecast is encouraging. Most companies are expecting technological M&As to keep growing strongly and an increase in private equity investment," said Robert Townsend, chairman of M&A business at Morrison & Foerster.

The PE investments will be more active over the next 12 months. Actually 2017 marks the first year in history that PE firms have announced more tech acquisitions than companies listed on US exchanges, according to the 451 Research’s M&A KnowledgeBase.

The acquisitions of companies with potential to grow, including small start-ups, by PE firms will rise in the next two years as PE firms are  increasingly targeting non-traditional companies to accelerate the development of their business.

Meanwhile, nearly 80 percent of the respondents said Chinese acquisitions of tech companies in the United States will decline under President Donald Trump.

"Chinese acquirers may hold off on US acquisitions, as US President Trump officially killed the planned $1.3 billion purchase of US firm Lattice Semiconductor by a Beijing-based fund on national security grounds in mid-September," said Sun Chuan, partner of Morrison & Foerster.

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