PALO ALTO — Technology deals buoyed the overall mergers and acquisitions outlook in 2013, and in 2014, business already appears to be booming.
The tech sector saw more dealmaking in recent months than at any point since the millennial tech boom, according to third-quarter findings compiled by accounting firm Ernst & Young, which showed a mix of eye-popping big deals and an increase in smaller-ticket volume. Analytics on the fourth quarter will come out in a few weeks.
The industry also turned the page on 2013 by putting a bevy of closes on the books. According to sister publication AmLaw Daily and other sources, the past week saw tech transactions totaling $4 billion in value, keeping teams of Big Law attorneys working around the holidays.
On Thursday, Milpitas-based cybersecurity company FireEye Inc. announced it had purchased forensics business Mandiant Corp. in a nearly $1 billion transaction that closed Dec. 30.
The company used about $105 million in cash and a combination of stock and options to purchase the D.C.-area firm, which entered the spotlight last year with its reports on the activities of Chinese hackers. FireEye turned to Wilson Sonsini Goodrich & Rosati, the firm that helped take it public in September, for advice on the deal; Mandiant tapped Cooley, in a deal the The New York Times suggested could create a formidable competitor to security giants like Symantec and Intel’s McAfee.
And in a headline-grabbing deal announced Monday, Oracle said it plans to buy cloud-marketing software company Responsys for $1.5 billion in a deal expected to close this year. The Redwood City giant, which has been on an acquisition tear recently, tapped a team from Weil, Gotshal & Manges for the deal. Responsys turned to Fenwick & West.
That momentum may well carry into 2014, according to the latest M&A Leaders Survey issued by law firm Morrison & Foerster and 451 Research. The poll, published in November, canvassed some 200 tech industry players, from executives to in-house counsel and their various advisers. Over the next six months, 50 percent of participants said they anticipate M&A activity will increase.
Some said that dealmaking will be essential for companies in certain sectors, who must evolve or risk being displaced by nimbler, more innovative rivals. Moreover, those surveyed said they expected the universe of buyers to expand as the IPO market continues to be a viable source of capital for tech companies—a point exemplified by FireEye.
“The stage is being set with a significant group of newly public companies who will be transitioning into M&A mode as they settle into being public,” one tech executive responded, a sentiment echoed by some Bay Area lawyers as they look down the pike.
Other respondents predicted a growing focus on the human capital aspect of deals, a nod to the acqui-hire phenomenon that has swept Silicon Valley. A third of those surveyed said they forecast an increase in M&A as a means to take on employees, and 40 percent said that they predict more attention to be paid to new deal structures that help retain employees following an acquisition.
In another twist to the question of how companies will continue to attract and retain talent, Pillsbury partner Michael Sullivan, based in San Francisco, said he predicts that the nucleus of activity will continue to migrate north as tech titans seek out city digs.
AmLaw Daily senior reporter Brian Baxter contributed to this report. Contact the reporter at firstname.lastname@example.org.