Q2 Mergers and Acquisitions Hit 5-Year Low Due to Pandemic

Technology, media and telecom (TMT) mergers and acquisitions plummeted 40% during the first six months of the year, thanks to the COVID-19 pandemic.

That’s according to a new report by GlobalData. The volume of deals in the second quarter of 2020 was lower than any quarter over the last five years.

Despite the drop, a number of big mergers and acquisitions took place during the first half of the year. For example, Verizon Business purchased BlueJeans Network, a video conferencing and event platform, and one of Zoom’s key rivals. And Lifesize and Serenova merged, creating a contact center communications and workplace collaboration company serving more than 10,000 customers globally.

Also, BCM One acquired nexVortex.

Transaction Values Down

Some 253 M&A deals with a transaction value of $50 million or more were announced during the first half of 2020, according to GlobalData. That’s down 40% compared to the first half of 2019.

The combined transaction value for the first six months of 2020 was less than $217 billion, a 24% drop from $285 billion in the last half of 2019, and 51% down from the same period last year. The pandemic is the primary cause.

Connectivity, financial tech, cloud, e-commerce and big data were the top five themes driving M&A in TMT from January-June. They accounted for $162 billion, or 75% of deal value.

Snigdha Parida is thematic research analyst at GlobalData.

Global Data’s Snigdha Parida

“As COVID-19 redefines business priorities, it is important for companies to focus not only on the themes that are important for the short term, but also invest in themes that would enable them to become more resilient and responsive in the longer term,” she said.

COVID-19 has considerably hastened the shift toward digitalization across several industries, according to GlobalData. Demand for laptops, broadband and video conferencing has increased.

“Post-COVID-19, many businesses will continue to use these technologies as their employees and customers become more accustomed to working remotely,” Parida said. “Many companies, including Infosys, Square and Twitter are considering adopting permanent remote working models to ensure employee safety. These shifts are increasing the relevance of technology themes such as cloud, connectivity, cybersecurity, IoT and digital media.”