Strategy Analytics: IoT 2016 Merger and Acquisition Activity Accelerates
Mergers and Acquisition (M&A) activity in the Internet of Things (IoT) and related segments including the connectivity and wireless markets hit an all-time high in 2015. Activity continues unabated, with no signs of slackening. In the first four months into 2016, the M&A activity is already matching and may eclipse the pace set in 2015, which was a record breaking year both in terms of the number and value of acquisitions.
The biggest M&A deal of 2016 to date, so far is the February announcement that Cisco was buying Jasper Technologies IoT services’ platform for $1.4 billion. But the year is still young and more high level acquisitions will undoubtedly follow.
The most desirable acquisition targets are companies whose core competencies are concentrated around analytics, security, connectivity platform capabilities and services. And within those product categories IoT vendors are especially eager to acquire companies in hot vertical segments including:
At the end of 2010, the industry counted a scant one dozen acquisitions in the then fledgling IoT market. By the end of 2015, SA estimates there were 81 mergers and acquisitions, a nearly seven-fold increase in five years (See Figure 1). Also notable is the increase in the worth of the companies being acquired. It’s true that top tier IoT vendors may still purchase niche startups just out of stealth mode for relatively modest prices of $50 million, $100 million or $200 million (US dollars) for a promising IoT product, engineering talent, plus a valuable patent portfolio (present or future). But M&A deals of $1 to $2 billion are increasingly common and mega-billion deals – like Intel’s purchase of Altera for over $16. Billion, is no longer a rarity.
The value of the IoT deals indicates the lengths to which the major vendors will go to maintain their current leadership positions and secure their place in the IoT firmament over the next three-to-five years. Additionally, the celerity with which the deals are occurring mirrors the quickening pace of IoT product rollouts and adoption.
See full report here; Strategy Analytics