A new study reportedly indicates that a declining number of transactions at lower prices means that many IoT businesses might be missing their chance to have mergers. On the other hand, if investors were waiting for prices to fall, then this might be an opportunity.
During 2018 about $89 billion was spent on mergers in the IoT sector, down about $23 billion from 2016 when deals worth more than $112 billion were completed. This is mostly because all the massive monster deals for semiconductor players have already happened, the report says.
This is shown in the new Riot Report: “IoT M&A Activity enters death spiral: The land-grab is over,” now out from Rethink Technology Research’s Riot (Rethink IoT). The entire report is available now starting at $1,850. It includes a full spreadsheet with all 501 deals they have tracked since 2015, which relate to some aspect of IoT.
This past year was saved from disaster, the report says, by the Q4 performance with $46.7 billion of 2018 deals coming in Q4. Deals made in Q2 and Q3 totaled just $13.6 billion and are the weakest quarters of mergers in the sector since the research firm began following it in 2015. Many smaller companies were acquired with Q2, accounting for 44 deals, double the number of deals carried out in 2015, but each with lower valuations.
The IoT industry is losing enthusiasm for IoT acquisition, the report posits, because IoT revenues have not grown as fast as was originally assumed. Venture capital and private equity enthusiasm for the IoT is therefore waning and while global M&A has hit historic highs, from June 2017 to June 2018, IoT has not kept up. Semiconductor M&A declined from 2015’s record-high $107.3 billion.
Semiconductors continue to comprise most of the larger deals and in 2018, Microchip bought Microsemi (News - Alert) for $8.35 billion and Renesas paid $6.7 billion for IDT to boosts its automotive chip offerings.
For more information about this report download the Executive Summary.