August 17, 2016

Aggressive Market Outlook For IoT M&A

The Internet of Things (“IoT”) M&A market experienced tremendous growth in the first half of 2016 and the outlook is expected to be equally aggressive.  The total number of IoT connections will grow from 6 billion in 2015 to 27 billion in 2025 and companies are quickly learning to transform device and sensor data into valuable competitive intelligence.  Connecting devices and extracting data is rapidly transforming the competitive landscape.

We at Clearsight Advisors recognize the inherent overlap between Big Data and IoT and see M&A trends changing as a result.  Primarily, we see an increasing focus on harnessing intelligence stemming from data created by multiple devices and sensors. Data visualization is becoming more common to properly harness intelligence and make data more easily digestible. However, all of these newly connected devices and sensors adding to the IoT landscape need to be properly secured, which was the primary driver for one of our recent transactions, the sale of Van Dyke Technology Group to Jacobs Engineering.

In the first half of 2016, there were nearly two dozen major acquisitions in the IoT space according to Strategy Analytics. The biggest M&A deal of 2016 to date is the February announcement that Cisco bought Jasper Technologies’ IoT services platform for $1.4 billion. Other large deals focused on IoT included Sony’s acquisition of Altair ($212M), Intel’s acquisition of Nervana ($408M), Cypress’ acquisition of Broadcom’s IoT business ($550M), and Nokia’s acquisition of Withings ($192M). We expect more large acquisitions will follow this year, and that strategic acquirers will be behind the largest deals as they race to bring more IoT capabilities in-house. Private equity firms will be more hesitant as the market continues to develop. Clearsight remains excited and optimistic about the M&A environment surrounding IoT and will be continuing to monitor activity the rest of the year.