Companies and startups in cloud computing, artificial intelligence and the Internet of Things are expected to be the most sought-after M&A targets over the next few years, according to new data from PwC.
The firm’s annual Deal Insights data for 2016 and 2017 predicts companies in the cloud software industry will be in especially high demand this year.
Last year saw strong M&A activity overall. PwC says more than 1,600 technology deals were announced in 2016, including 11 valued at more than $5 billion each. Software was the most active area last year, with a total of 659 deals totaling $88.4 billion.
The interest in software will continue this year, PwC predicts, with buyers looking for cloud and artificial intelligence software in particular. Companies invest in new technology in part to grow capabilities without having to invest both time and resources into R&D.
Non-digital buyers — including those in the retail, automotive and healthcare space — bought 167 technology companies last year. PwC says such businesses are likely looking to accelerate their "transition into more digital business models" as the year progresses.
Earlier this week, Google corporate development leader Don Harrison said his company’s M&A activities will focus on AI and cloud this year in an effort to grow its enterprise services. Google alone completed about 20 deals in 2016.