Tech CFOs Anticipate Revenue Rebound in 2013, According to BDO USA Survey

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Thursday, February 21st 2013

CFOs Expect a Busy Year for M&A Activity, But IPO Growth Challenged

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Despite concerns about a global economic slowdown, 58 percent of technology CFOs anticipate revenue to increase in 2013, according to data released today by BDO USA, LLP. CFOs foresee overall revenue increases of 8.7 percent – an increase of 6.1 percentage points from 2.6 percent in 2012. Of those CFOs who anticipated revenue growth, 20 percent expect their business’ bottom line to increase by 5 to 9 percent; only about one-in-ten CFOs surveyed expect revenue to decrease.

Merger and acquisition (M&A) activity is expected to remain strong in 2013, according to the CFOs surveyed. Nearly all CFOs expect M&A activity will increase (60 percent) or remain the same (25 percent) as 2012 levels. CFOs predict that M&A activity will be primarily offensive (72 percent), with 33 percent of financial officers identifying access to technology assets and intellectual property as the primary driver for M&A, followed by revenue and profitability (29 percent) and market share (20 percent). While access to technology assets and intellectual property (IP) has always been a factor for technology companies’ acquisition strategy, this is the first time in survey history that CFOs cited it as the primary reason for M&A activity.

“We are at the beginning of a new ecosystem in the tech industry. The ‘acquire or retire’ mentality is growing among technology companies who see acquisitions as a way to enhance their IP and gain access to talent that will advance their brand and product portfolio,” said Aftab Jamil, partner and director of the Technology and Life Sciences practice at BDO USA, LLP. “Acquisitions by Facebook and Google are excellent examples of recent M&A trends that focus on the acquisition of talent and IP as the primary strategic drivers.”

These findings are from the seventh-annual BDO Technology Outlook Survey, which examined the opinions of 100 chief financial officers at leading technology companies throughout the United States. The survey was conducted from December 2012 to January 2013.

Other major findings from the 2013 BDO Technology Outlook Survey include:

  • Software sector driving M&A activity. Of CFOs surveyed, 63 percent expect the competitive software/cloud computing sector to drive the most deal activity, a 62 percent increase from 2012. Hardware (13 percent) and social media (10 percent) are also expected to be key drivers.

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Contacts

Bliss Integrated Communication
Erin E. Burke, 212-584-5477
erin@blissintegrated.com

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