This Year’s Tech Deals Near $300 Billion, Boosted by Microsoft and Twitter Buys | Charts

Tech deals are off to an explosive start this year, with transactions potentially beating the record of $792 billion in 2021.

Thanks to blockbuster deals by Microsoft and Elon Musk, acquisitions already hit $281 billion by the end of April, according to S&P Global Market Intelligence’s 451 Research. That means deals in the first four months of 2022 have already outpaced last year’s total of $253 billion for the same period, as the consolidation and competition trends continue across the tech and telecom industry.

Two key deals topped the charts: In January, tech behemoth Microsoft announced its largest-ever acquisition, a $74 billion deal for gaming giant Activision Blizzard. In April, Elon Musk said he would take Twitter private in a $44 billion deal, though that acquisition is being stalled and the closing date of October remains uncertain. (Read more about why the Twitter takeover is on hold here.)

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The next runner-up by price tag was software investment firm Vista Equity Partners and Evergreen Coast Capital’s acquisition of cloud company Citrix Systems for $13.2 billion in January. There was a total of 1,807 deals made from January to April 2022, compared to 1,186 deals during the same period last year, according to S&P.

As far as what to expect for the remainder of 2022, S&P’s 2022 survey found that two-thirds of tech acquirers and senior tech investment bankers expect deals to rival or exceed the record set last year. However, S&P analyst Brenon Daly said the volume of deals has slowed down in the last month as tech stocks took a hit in the markets, with its S&P Index plunging some 11% in April.

“Our data indicates that NYSE-and-Nasdaq-traded companies announced the fewest deals in April of any month so far this year,” Daly noted. “But their absence truly showed up at the top end of the M&A market.”

But as Daly warns, one big concern on buyers’ minds right now is rising inflation. That will continue to impact deals going forward as a recession looms. The market will often quiet down after a series of big deals.

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“We’re definitely seeing the increase of competition on the advertising side, especially with [social media],” Sneha Pandey, insights manager at SimilarWeb, told TheWrap. “Supply chain issues have been affecting tech companies across the borders.”

Going back to this quarter, Microsoft and Musk’s purchases stand out for another reason: They mark two of the largest-ever tech transactions since 2002, the start of S&P’s M&A KnowledgeBase data covering the last two decades. Microsoft’s purchase of Activision was the single largest deal since 2002, while Dell’s acquisition of EMC for $63.1 billion in 2015 came in second.

The third largest deal also happened in 2015, with Charter Communications purchasing Time Warner Cable for $56.7 billion. China Unicom’s merger with China Netcom Group at $56.3 billion became the fourth largest in 2008, and Musk’s pending purchase of Twitter for $44 billion is now the fifth largest transaction.

Microsoft’s acquisition, in particular, helped assert the tech giant’s dominance in gaming, with Activision and its existing gaming studios combining to make it the third largest gaming company by revenue. Microsoft continues beating Sony’s PlayStation and Nintendo’s subscriptions business in the video game sector.

“The Xbox game pass has been in the lead for a while,” Pandey said. “This acquisition will only continue to widen the Xbox lead [in subscriptions].”

But while these mega deals put 2022 spending on track to beat last year’s nearly $800 billion in transactions, Daly explained that a “normalized” deal flow excluding Microsoft and Musk’s purchases would actually put annualized spending about 40% lower — making it some $500 billion for this year. And this lower total in deals is possible given the current macroeconomic picture.

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