According to a new report by Ernst & Young, Mergers and acquisitions (M&A) activity in the global technology sector grew for the third consecutive quarter in Q4 2009, bringing optimism for continued growth in 2010.

Following consecutive rises in Q309 and Q209, after bottoming out in Q109 (at 405), Global technology M&A update found that deals done in the technology sector rose by 13% to 553 in the quarter, compared with 488 in Q309.

According to Global Technology Transaction Advisory Services Leader at Ernst & Young, Joe Steger, "Technology sector M&A has emerged steady and positive in 2010. Companies faced a variety of pressures in 2009 from managing excess capacity and expenses to drops in sales to tightened credit markets and they faced them with renewed emphasis on financial and operational flexibility.”

Also the total deal value quadrupled in Q409 (US$35.4 billion) compared with Q408 (US$9.2 billion), though full-year 2009 total M&A disclosed value (US$94.8 billion) is 2% lower than full year 2008 (US$96.3 billion).

Boding well for continued growth in 2010, quarterly value totals gained momentum throughout the year with 7 of the top 10 largest deals by dollar value breaking US$1 billion both in Q309 and Q409. Average value of deals rose 51% to US$145 million in 2009 from US$96 million in 2008.

Adding to his statement, Steger said "Technology corporate deal values have surged in comparison to PE values as leading corporate companies have used their strong cash positions to do deals at reasonable valuations. PE firms had less flexibility in 2009 due in part to the difficulty in arranging debt financing." 

(With Input from Agencies)