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Semiconductor

Extracting value from smaller M&A semi deals

May 16, 2022 5-MINUTE READ

RESEARCH REPORT

In brief

  • Mergers and acquisitions have traditionally helped companies tap into new advantages, but those seeking larger mergers are facing scrutiny.
  • This research presents 3 points of proven and refined target screening frameworks when considering a small deal merger or acquisition.
  • We present examples of multiple deal size, strategies, challenges and results across the semiconductor industry.

The demand for semiconductors and the rate of technological advancement in chips have never been greater. Leaders of these companies recognize that to stay competitive with new resources and capabilities, they must find innovative ways to take advantage of those unique opportunities. Mergers and acquisitions have been a traditional method of growth, but increased regulatory scrutiny and fewer large semiconductor companies are creating a trend of smaller deals across the industry. This trend is making it critical for semiconductor companies to learn how to maximize their value from smaller transactions.

M&A in the Semiconductor Industry

View Transcript

The global economy saw a shift in 2021. The global chip shortage, combined with an increased investment in domestic production, is a signal of potential opportunity for the semiconductor industry. From 2016 to 2021, average transaction value in the semiconductor sector was below the $1 billion mark, and few megadeals of the $10 billion or greater are in sight.

Average transaction value of mergers, acquisitions, spinoffs ($M)

Acquisitions in the semiconductor with private equity involvement by year.

Extracting value by deal rationale

Accenture Strategy analysis shows that the average acquisitive company completed four acquisitions from 2015 through to early 2021. By comparison, the 30 most acquisitive firms made 42 deals within the same period, outperforming less frequent acquirers when their weighted total shareholder return was analyzed.

  1. This increase of deals comes with maximized integration efficiency and deal profitability, which can come from adhering to proven and refined target screening criteria.

Technology advantage

How firms race toward the next generation inputs so they can deliver the next generation of outputs.

Product & process evolution

How firms transform the way they work to optimize their operations.

People infusion

How firms leverage transactions to bolster their human capital potential.

Gregg Albert

Managing Director – Accenture Strategy, Transaction Advisory

Gregg's expertise lies in maximizing deal value and accelerating value capture in M&A, while minimizing transaction costs.

Garrett Oliveira

MANAGER – ACCENTURE STRATEGY, MERGERS & ACQUISITIONS

Garrett is a cross-industry M&A strategist, serving clients across the transaction life cycle as they pursue growth opportunities.

Contributors

MAX ABISH

Senior Strategy Analyst

WILLIAM MCGUIRK

Business Strategy Consultant

How can leaders plan, prepare, and close ten $1 billion deals as efficiently as one $10 billion deal?

Implications for private equity firms and corporate deal teams

Looking into 2022, large semiconductor companies are eager to expand their capacity due to robust demand. As a result, valuations for small and medium-sized businesses are at an all time high. If deals continue to trend toward smaller plays, a potential resurgence in private equity can be expected.

Acquisitions in the semiconductor with private equity involvement by year.

With the market trending towards smaller, more frequent transactions, it is now more important than ever to assess targets in a disciplined manner and build strategic M&A muscle for your organizations.

Related capabilities

Mergers & acquisitions

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