Global technology sector M&A deals total $356.3bn in Q2 2021

Discovery’s $43bn acquisition deal with Warner Media was the technology industry’s biggest deal of Q2 2021 as deals worth $356.3bn were announced globally in the quarter, according to GlobalData’s deals database.

The value marked an increase of 20.4% over the previous quarter and a rise of 38.8% when compared with the last four-quarter average of $256.71bn.

In terms of number of deals, the sector saw a rise of 19.92% with 6147 deals in Q2 2021 against the average of 5126.00 deals in the last four-quarters.

In value terms, North America led the activity with deals worth $230.56bn.

Technology industry deals in Q2 2021: Top deals

The top five technology industry deals accounted for 32.1% of the overall value during Q2 2021.

The combined value of the top five deals stood at $114.31bn, against the overall value of $356.3bn recorded for the quarter.

The top five technology industry deals of Q2 2021 tracked by GlobalData were:

1) Discovery’s $43bn acquisition deals with Warner Media

2) The $20.9bn private equity with Toshiba by CVC Capital Partners SICAV-FIS

3) Microsoft’s $19.7bn acquisition of Nuance Communications

4) The $18.41bn acquisition of Advanced Info Service Public by Gulf Energy Development

5) Thoma Bravo’s private equity with Proofpoint for $12.3bn

Current state of the UK tech sector

The UK tech industry has expanded 10-fold in the last 10 years, enabling the creation of hundreds of fast-growing tech companies that are set to challenge Silicon Valley in the coming decade.

Since 2010, the UK has experienced a sustained increase in the venture capital flowing into the tech sector, which has resulted in a huge expansion in the number of start-ups that are scaling rapidly in sectors as diverse as fintech, food delivery, e-commerce and healthtech.

Over the course of 10 years, the total number of unicorns the UK has had has increased from eight in 2010 to 81 in 2020. Unicorns from 2010 including Betfair, Admiral Group and Ocado are now household names. Meanwhile the number of futurecorns – companies capable of growing into a unicorn – has accelerated from 10 to 126 in 2020. Over the same period, venture capital investment into the UK has increased from £1.2bn in 2010 to £11.3bn 10 years later.

These numbers demonstrate the extent to which the UK is catching up with the US and China in tech, with London now fourth behind the Bay Area, Beijing and New York, when it comes to the number of start-ups and unicorns created. No other European country has been able to grow at such a speed.

While France has invested millions of euros in its start-up ecosystem, in 2020 it had only 17 unicorns, up from zero in 2010. Germany had one unicorn 10 years ago and 31 in 2020 – including companies such as insurtech platform Wefox, neobank N26 and travel e-commerce platform Omio.

Digital secretary Oliver Dowden said: “UK tech has seen record levels of growth over the last decade, turning a nation of start-ups into one of scale-ups. Investors are interested in backing UK start-ups because of a combination of cutting edge research, skilled engineering and tech talent and operators who understand how to build a strong, sustainable business.”

Growth continues in 2021

During 2021, the total number of unicorns and futurecorns has continued to grow. The UK has now created 91. A further 132 companies are now regarded as ‘futurecorns’ – companies with a value of between $250m (c.£179m) and $1bn (c.£718m) – which are on a path to unicorn status.

Though the majority of the futurecorns are based in London (83), the remaining firms can be found all across the UK.

Cambridgeshire and Oxfordshire have 10 and 11 respectively. The North West has five futurecorns and in Scotland there are currently four fast-growing futurecorns. Wales has one futurecorn.

UK Tech Employment Trending Up Across Region

Technology employment, already 7.6% of the total workforce in the United Kingdom, is poised for broad-based growth in 2021 as employers continue their post-pandemic recoveries, according to a new report from the Computing Technology Industry Association.

In its “UK Tech Industry and Workforce Trends” report CompTIA estimates that tech employment will grow by 37,000 positions this year, a 1.5% increase over 2020. The report also notes that employer job postings for tech positions, which dipped during 2020 due to the pandemic slowdown, rebounded in Q1 2021 as employers address pent-up demand.

“Over the pandemic, tech has proven its worth in enabling businesses to continue to work, with automation and emerging technologies playing an important role in helping streamline the ways in which people work in a constantly changing world,” said Tracy Pound, chairwoman of the CompTIA Board of Directors and founder and managing director of Maximity in Birmingham.

“However, cyber criminals have also taken advantage of the situation with a huge increase in attacks on both companies and individuals,” Pound continued. “The demand for tech skills has never been higher, as CompTIA’s research bears out, with the tech industry achieving recognition as an invaluable contributor to business success.”

Northern Ireland is projected to see the largest percentage increase in net tech employment this year, with 2.4% year over year growth and 1,072 jobs added. Scotland (1.8%, +3,567 jobs) and England (1.5%, +32,391 jobs) follow, with tech employment expected to remain steady in Wales. Employment growth is anticipated in 12 of the 13 metropolitan markets included in the report.

Another trend to watch – one in five job postings in 2020 were for positions in emerging technologies such as artificial intelligence, automation, blockchain and internet of things, or jobs requiring skills in those areas.

The CompTIA report reveals that nearly 2.5 million people were employed in technology positions in the UK last year, with employers in IT consultancy and services, such as managed services providers (MSPs), accounting for the largest share (595,371 employees). Other industry sectors that are well represented include engineering, testing and technical consultancy (458,716), telecom, data processing and web portals (278,999), software publishing and custom development (225,030) and tech manufacturing (118,067).

There are more than 282,000 tech firms with payrolls across the UK. Combined they generated £101.8 billion in direct economic impact last year, an estimated 7.2% of the total UK economy.  As expected, London dominates with 57,168 tech business establishments. Other markets boast healthy tech sectors, as well, including Manchester (9,853 tech companies), Bristol (5,825) and Birmingham (4,411).

Other data points in the report illustrate the breadth and strength of the UK tech sector. For example:

• Manchester, Nottingham, Edinburgh, Glasgow and Birmingham all recorded increases in net tech employment of 1,000 jobs or more in 2020.
• The percentage of job postings for emerging tech positions is highest in Edinburgh (24%) and Belfast (23%).
• Five metropolitan areas (London, Edinburgh, Leeds, Bristol and Glasgow) have a higher concentration of tech workers than the national benchmark of 7.6%.