So far, 2016 has not been a stellar one for big-name initial public offerings (IPOs), but an Ernst & Young report says the mergers and acquisition (M&A) outlook remains positive with more and more non-tech companies acquiring tech companies.
"It is easier to acquire tech companies than to build it. We have seen triple the number of deals of non-tech companies acquiring tech companies already," Pip McCrostie, the Global vice chair of Transactions Advisory Services at EY told CNBC.
Non-tech volume rose 26 percent year on year to 147 deals. With a total of 1,002 deals in the tech sector, M&A volume for the first quarter of 2016 was up by 8 percent on the previous quarter and 2 percent year on year. Of the 1,002 overall tech M&A deals, 14 rose above $1 billion, including 3 at $5 billion or more.
Equity market turmoil and the increasing difficulty of obtaining debt appeared to have minimal impact on global technology deal making in the first quarter of 2016, the report says.
The EY report surveying over 1,700 executives in 45 countries found 2016 to be a strong year for M&As with around 50 percent of companies planning on making acquisitions this year and 40 percent aim to boost sales through partnerships. This however is down from 59 percent of participants who were anticipating M&A in EY's October report.
"The outlook for M&A is so much positive. We hit a record year in 2015 and 2016 is set to be a very strong positive year as well," McCrostie said. "Not as toppy as 2015 but very robust. It is driven by key factors such as continued cost cutting and operational efficiency driving consolidation."