Global technology divestments grew 37% in the last year, driven by digital transformation

The global technology sector experienced unprecedented divestment activity in 2016, according to the technology findings from the EY Global Corporate Divestment Study. The volume of global technology divestments valued at more than US$100m grew 37% from 2015 to 2016. Mega-divestments, valued at more than US$1b, rose by 300% last year to 28, up from just seven in 2015.

The study surveyed more than 180 senior and C-suite technology executives between October and December 2016. Of these, 80% agreed that “digital transformation” is influencing divestment plans. In addition, 67% of respondents cite underlying industry trends, such as cloud and software as a service, as driving factors.

While software and services featured prominently in last year’s top 10 divestments, EY figures show hardware was the major driver of 2016 activity. Among divestments valued at more than US$100m, 30 were of hardware businesses, nearly doubling the 17 seen in 2015.

For a sector historically slow to divest, 2016 saw something of a divestment boom in technology. However, our survey results suggest that most tech firms are not planning significant divestment activity in 2017. Just 27% of tech executives in this survey expect to divest in the next 24 months — much lower than across all sectors, where 43% expect to divest over the next two years.

Barak Ravid, Managing Director, Co-Head Technology, Parthenon-EY, says:

“Divestment of non-core businesses is an effective way to streamline the core business and raise needed capital to support growth. Those who continue to serially acquire without engaging in healthy portfolio pruning will be less prepared as the next wave of disruptive forces — including machine learning, intelligent things, blockchain and augmented reality — reshape the technology sector.”

To view a full copy of the technology findings from the EY Global Divestment Study, visit: divest.ey.com/technology.

EY Legal Services Contacts:

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Richard Norbruis – Global Transaction Law Leader

 

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Richard Goold – Global Technology Law Leader

 

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Rutger Lambriex – Global Corporate Law Leader