Corum Annual Report 2018

 

2017 Scorecard

Bruce Milne (cont’d)

Tim, how'd we do on predictions?

Timothy Goddard

Predictions, yes! It was quite the year to predict, and I think we did remarkably well given the troubles that frankly everyone else seemed to have understanding what was going to happen this year.

We did not hit all of them, just running down this list:

GE did not extend its shopping spree. We were not the only ones who missed this, basically the whole market did and they are suffering the consequences as a result.

Blockchain, speaking of crashes, I think the entire volatility of that market really scared people away on the finance side. We did see some interesting things start to happen outside of finance and we'll talk more about that in a little bit.

Sovereign funds cut out the middle man... a little bit. We saw that particularly with the $2.5B put into Uber from Saudi Arabia. It didn't move into M&A fully but we did see them start to cut out the middleman and we may see that more going forward.

Repatriation leading to multiple acquisitions of tech unicorns, those acquisitions didn't happen, because the repatriation just now kicked in, we'll see that going forward now and we'll get to that shortly.

Now, the ones that we hit very well:

The industrial sector did indeed follow GE and Siemens, despite what happened there. Our sale of Visual Components to KUKA Robotics is one example and then on a much larger scale, the United Technologies acquisition of Rockwell Collins is another one.

Major AI players making notable acquisitions in data security, we saw this across the board. Microsoft's acquisition of Hexadite was one good example this year.

Major tech firms moving into the connected car space; Intel's acquisition of Mobileye, again, the largest deal on that one, but there were a lot of other moves there that we'll talk about.

And then, finally, Amazon will make an unusual acquisition. I think we called this so well I will give us an 11 out of 10 on this one. The Whole Foods acquisition is about as unusual as you could guess and it is driving a lot of things and we will discuss that more later.

2018 Predictions

So let's see what we have on tap for the year ahead:

  • Again, we think Amazon will make a move. This time, into the healthcare space via M&A. We know they're moving towards healthcare, that's fairly public at this point, but we think there are going to be some key acquisition that happens around that.
  • Uber with a down round is going to drive some other valuations for unprofitable unicorns. We think we'll see a bit of a sorting there.
  • Chinese buyers returning to the market with major deals. This was down, there were currency controls put in, we think we're going to see that shift, maybe towards the end of the year.
     
  • Big name old-line companies make their first major tech acquisitions. We saw a lot of that last year, we think we're going to see a lot of it in the year to come, driven by things like the repatriation.
     
  • More chip wars surfacing. There have been two and we think there will be more and there will be M&A in response to that as there has been with so many other issues in the security space like this.
     
  • Meanwhile, blockchain, you'll see these applications start to demonstrate real value. And you're going to see M&A increase as it relates to that.
     
  • Going back to the sovereign funds, we think we'll see Arab money leading a major tech acquisition.
     
  • Finally, reparation, just now kicking in, will lead to multiple high-profile companies acquired at the mega megadeal level.
     

Bruce Milne

Indeed, we're already seeing the repatriation start in a big way. Apple just announced they are repatriating $250B. It's interesting all the pundits said around $400B issued for all the tech companies total, but they're sitting on more than $1T, closer to $1.5T or $2T and we think there will be a massive repatriation, which we think will be the largest movement of capital in modern history and we think it will dramatically affect M&A as we talked about in our webcast last month on tech M&A under the new tax laws.

 

This is a segment from Tech M&A Monthly: Forecast 2018 - Global Tech M&A Report (January) webcast. For more information, please visit Corum Group's Software M&A Webcast Archive.