The Technology M&A Review: Editor's Preface
Welcome to the second annual Technology M&A Review. This addition to The Law Reviews series grew out of discussions between the publisher and editor in late 2019 and early 2020. Like every contributor to this book, I am an active M&A practitioner. As such, it seemed fair to agree to an annual review in late 2019, well before covid took the reins.
I know I do not need to explain why 2020 was a different year than most. The first quarter of 2020 M&A activity was comparatively awful. Then the second quarter was consumed by trying to understand what covid meant, not only for the M&A legal market, but for each contributor to this book, and her or his family.
And yet, the publisher and each member of its staff continued to support the project, and gently nudged it forward. It and they each deserve credit in large part for whatever is well done in this book and its latest edition.
And so we have an annual update review that keeps 30 June 2020 as its base, and that both distorts and understates the power and vibrancy of the technology industry over this unusual period. The book's contents show technology M&A's growth and march to ascendency over the past 30 years. Even compared to the awful decline registered by all M&A activity measured at 30 June 2020, technology M&A far outpaced every other category of M&A, and it showed its resiliency and power even more so in the first half of 2021. Technology M&A, in terms of growth in value and numbers, continues the champion's jog around the track; the race is not even close.
Why? Growth and resiliency. While the technology M&A sector shares its DNA with other sectors, it is a growth sector even though it is ubiquitous, and in its nature is designed to be changeable. We all intuitively know one cannot change the design of a gas turbine on the fly, but one can change a lot in the technology space very quickly.
Embedded in the previous paragraph is a rate of change equation of sorts. For most technology applications that do not involve life or death functions, there is no competitive limit on the rate of change. There was, in effect, no social media industry in 2000, and now it is quite difficult to actually describe it – and yet it is huge. There have been unbelievable advances in, inter alia, food production and power plants since that same date, but no one thinks of these as growth industries. These industries' advances are thought of, consciously or unconsciously, as recipients of technology but not creators.
This book's goal is to both highlight the similarities and differences between technology M&A and 'normal' M&A, without taking too much time to try to define what technology and normal are. One of its unstated premises is that because of technology's importance, effective M&A technology lawyering necessarily involves and requires a broad set of legal skills across many practice areas; and that requirement will likely increase as governments and interest groups from all spectrums focus on the sector. The sector is critical because it is 'where the money is', where the anticipated growth is and where, at least in the Western world, the political battles are and will be waged.
At least as of the time of this writing in September 2021, technology M&A in the US is robust, reflecting its advantage in a digital world. Despite any changes in regulation or monetary policy, compared to other sectors its prospects are, and will continue to be, relatively better.
Michael J Kennedy
Paul Hastings LLP