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Acquisition Spending on Disruptive Tech Climbs 28% YoY, Says Deloitte

Mar 28
Tags: Deloitte
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Companies have significantly increased their acquisition spending on disruptive and innovative technologies, according to new analysis from Deloitte.

The consulting firm found that over the first two months of 2019, a global total of $217 billion (£164 billion) was spent on acquiring such technologies, representing an increase of 28% year on year.

Digital and analytics were found to be the largest segments to attract investment, but Deloitte also reported a "sharp" upturn in spending on fintech, cyber and healthtech acquisitions.

In all, companies have now spent a combined $877 billion since 2015 on acquiring disruptive technologies in a bid to drive growth through innovation, the report explained.

Sriram Prakash, Deloitte's global lead for disruptive M&A, said such technology is helping to transform industries and expose existing business models.

A desire to capitalise on the advantage of disruptive and innovative tech has brought about a "fundamental shift" in M&A strategy, he added, with non-tech companies now outspending tech firms on the acquisition of technological assets.

Across all market segments, M&A spending reached $467 billion across January and February. However, by the end of the first quarter, Deloitte is expecting a 4-7% year-on-year slowdown in deal volumes due to a range of economic and political concerns, not least the ongoing threat of a trade war between China and the US, the world's largest economies.

The global tightening of regulatory requirements has also started to affect mergers and acquisitions, with almost $300 billion of planned deals being withdrawn in 2018 after failing to pass scrutiny from regulators.

Iain Macmillan, Deloitte's global leader of M&A services, said: "In order to alleviate deal risks, acquirers need to consider detailed regulatory risk impact reviews before they initiate deals.

"We expect a greater emphasis on mitigating risk, undertaking thorough diligence, reassessing business portfolios, pursuing rapid turnaround interventions and optimising the integration process."

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