19 March 2018
| Alan Burkitt-Gray
Share flotations and mergers in telecoms and technology are set to surge this year, according to an annual deals forecast.
Law firm Baker McKenzie – working with Oxford
Economics – says that global mergers and acquisitions
(M&As) in the telecoms and technology sector will rise from
last years $295 billion to $648 billion this year.
At the same time initial public
offerings (IPOs) of shares will rise from $21.6 billion last
year to $45.5 billion this year. Both figures will then tail
off slightly over the next few years, but 2020 will still see
more activity in both M&As and IPOs than 2017.
Europe will see a doubling in M&A growth this year in the
sector, and two regions – Latin America and Africa and
the Middle East – will see a quadrupling in growth,
though from a smaller base.
Matthew Gemello, an M&A partner at Baker McKenzie based in
Palo Alto, said that innovation in artificial intelligence,
cloud computing, cyber security and big data is driving deal
activity. Many businesses that are focused on the use of
customer data will buy competitors and technologies to attract
more customer engagement, he said.
The firm also expects more cross-sector deals. Anne-Marie
Allgrove, global chair of Baker McKenzie’s global
TMT industry group, based in Sydney, said: "Hybrid sectors
represent the growing convergence of traditional industries and
technology as companies battle to remain competitive. When you
couple the rapid pace of innovation and continued push for
vertical integration, it creates a recipe for increased M&A
The law firm said it expected "a notable rise in the coming
year amid easing policy concerns in the US and EU, reasonable
GDP growth across regions, and accommodative fiscal
It added: "Several trends of embedding new technology across
sectors, plus activist investment in technology firms by
emerging markets such as China and Saudi Arabia, suggest strong
deal activity in 2018. In fact, the technology and
telecommunications industry is expected to drive the global
rebound in IPO activity in 2018, aided by the Chinese
government’s efforts to spur technology firms to
London-based Baker McKenzie partner Charles Whitefoord said:
"Many companies are sitting on significant cash piles.
Technology companies are coming under pressure to either deploy
that money or return it to shareholders."
Tom Rice, a capital markets partner at Baker McKenzie based in
New York, suggested that older private-equity funds with
"ageing tech investments that need to be sold or spun off"
would help to stimulate M&As and IPOs.
Paul Rawlinson, Baker McKenzie’s global chair,
added: "As long as the brakes are not put any further on global
free trade, we expect an uplift in both M&A and IPO
activity as dealmakers and investors gain greater confidence in
the business prospects of acquisition targets and newly-listed