Skip to main content

PwC Explores Digital Convergence M&A

The pursuit of digital convergence, and the resulting urge to merge, will likely bring about the next boom in the technology industry. Executives have learned from the last bubble and are approaching the current round of mergers and acquisitions more strategically, according to PricewaterhouseCoopers� �Technology Executive Connections� report.

CEOs have not forgotten the lessons of the dot-com crash � but there are key differences between then and now. For one, the early tech boom was built on promised results that, in many cases, never materialized. The current rash of development is built on concrete products and commercially viable offerings, the report notes.

Digital convergence is the effort to bring together computer, phone, recording and broadcast technologies within an all-digital environment enabling new, flexible uses of products and services. The pursuit of digital convergence is leading to increased corporate consolidation, with no sign of let up.

Approximately 64 percent of the 149 technology executives surveyed for PricewaterhouseCoopers� report expect the consolidation trend to continue over the next three years. CEOs surveyed by PwC fully expect a few flops and are treading more warily as a result. Forty-one percent of respondents anticipate major corporate failures, perhaps stemming from companies that reach too far beyond their strongest skills.

Survey participants listed software developers are the most likely target for acquisition (49 percent), followed by business information content developers (40 percent), wireless companies (19 percent), entertainment content developers (18 percent) and consumer electronic device makers (15 percent).

Many of the smaller companies questioned were apprehensive of M&A initiated by larger entities, fearing a loss of their entrepreneurial independence and spark. At the same time, they recognize that their size does not always grant them the final say in these situations.

Survey respondents noted that alliances and partnerships are viable and sometimes preferable alternatives to M&A. Almost half of CEOs surveyed (46 percent) felt that digital convergence revenue was most likely to be generated from these types of collaborations. Only 28 percent of CEOs placed M&A at the top of that category, and 52 percent actually prefer alliances to M&A. Partnerships often offer less permanent financial risk to a corporation, although alliances may also move too slowly to capitalize on a fast-moving opportunity.

The winners in digital convergence take a cautious but quick approach to M&A. Careful consideration and strategizing is a necessity � decision-makers must consider a deal from many angles. These points of examination include the culture of the possible acquisition, likelihood of retaining key staff members, cost balance effects and how the market would value the deal. Companies that then integrate quickly report more favorable productivity and profits.

Popular posts from this blog

Open Banking Usage to Grow by 470 Percent

The Open Banking business model has been advantageous for Third-Party Providers (TPPs), helping them to extend their offerings into other areas of financial services with new capabilities. Open Banking is also advantageous for traditional banking institutions, despite the perceived loss of custodianship over their data, by providing greater accessibility to more bank services. Furthermore, Open Banking can help serve Mobile Internet providers that are able to leverage it to create tailored services according to customers’ preferences and/or economic limitations. Open Banking Market Development Since traditional banking services are made more convenient by TPPs via greater data access, customers can proactively manage their finances and shape the development of new financial offerings. This is particularly noticeable in the realm of Digital Payments, where retail merchants and customers transact through eCommerce, which has the greatest number of use cases for Open Banking. These includ

Global Digital Business and IT Consulting Outlook

Across the globe, CEOs and their leadership teams continue to seek information and guidance about planned Digital Transformation initiatives and the most effective enterprise organization change management practices. Worldwide IT and Business Services revenue will grow from $1.13 trillion in 2022 to $1.2 trillion in 2023 -- that's a 5.7 percent year-over-year growth, according to the latest market study by International Data Corporation (IDC). The mid-term to long-term outlook for the market has also increased -- the five-year CAGR is forecast at 5.2 percent, compared to the previous 4.9 percent. Digital Sevices & Consulting Market Development IDC has raised the growth projection despite a weak economic outlook, because of vendor performances across 2022, growth indicators from adjacent markets, increased government funding, and inflation impacts. The actual 2022 market growth was 6.7 percent (in constant currency), which was 87 basis points higher than forecast last year, alth

Mobile Device Market Still Awaiting Recovery

The mobile devices market has experienced three years of unpredictable demand. The global pandemic, geopolitical pressures, supply chain issues, and macroeconomic headwinds have hindered the sector's consistent growth potential. This extremely challenging environment has dramatically affected both demand and supply chains. It has led to subsequent inflationary pressures, leading to a worsening global cost of living crisis suppressing growth and confidence in the sector. In tandem, mobile device industry stakeholders have become more cautious triggering market uncertainties. Mobile Device Market Development Operating under such a backdrop, the development of mobile device ecosystems and vendor landscapes have been impacted severely. Many of these market pressures persisted throughout 2022 and now into 2023, borne chiefly by the smartphone market. According to the latest worldwide market study by ABI Research, worldwide smartphone shipments in 2022 declined 9.6 percent Year-over-Year