This month in M&A: Why China's President is the most powerful man in tech

A round up of this month's tech M&A news

This is a contributed piece by Brett Cole of ansarada

Deal of the month

The khaki and blazer wearing Silicon Valley mergers and acquisitions banker is having a very good year. 

Global merger and acquisition revenue from technology sector clients stands at $1.89 billion as of September 3 this year, according to Dealogic. That is up 23% from the same period in 2014 when there was $1.5 billion of such revenue. 

Cue a very nice 2015 bonus for tech banking advisers. The technology sector accounts for 12% of total global M&A revenue, according to Dealogic. 

Such dealmaking is music to the ears of one of Silicon Valley’s great survivors, Frank Quattrone. 

Charged with obstruction of justice and witness tampering, Mr Quattrone's conviction was overturned by a U.S. appeals court ruling in 2006. The former Morgan Stanley, Deutsche Bank and Credit Suisse banker established Qatalyst Partners in 2008.

Qatalyst now ranks ahead of Wall Street's most iconic firm, J.P. Morgan, in advising on global tech M&A, according to Dealogic. Qatalyst has a wallet share of 10.6% of worldwide technology mergers and acquisitions compared with J.P. Morgan's 7.2% wallet share of such deals.

Qatalyst is only behind the mighty Goldman Sachs, which has a 13.5% wallet share of tech M&A. That is quite something else, no?

Mr Quattrone's firm has just 44 bankers, according to its website, proving that experience, contacts and a track record count for more to tech than the most hallowed names on Wall Street, including Mr Quattrone's former employers.

Who is the most powerful man in tech? Why Xi Jinping of course

Xi Jinping in America. The scene reminds one of Imperial China: supplicants lining up to greet the emperor.

In Seattle, China's president was greeted effusively by the who's who of US technology, including Amazon chief executive Jeff Bezos, Apple CEO Tim Cook, and their counterparts at Facebook and IBM Mark Zuckerberg and Virginia Rometty respectively.

It was all smiles for the camera when Beijing met Silicon Valley. But the New York Times reports America's tech titans are angry at what they see as cyber theft; forced technology transfer and regulations that unfairly discriminate against US corporations. 

Such complaints are decades old, likely to fall on deaf ears, and unlikely to stop the complainers from pursuing business in the world's most populous nation. 


China's 1.35 billion people is too alluring a market for tech firms.

CEOs may complain, never to someone in the position of Mr Xi, but they are hardly going to cause a fracas that will damage their business prospects in China. Apple, in its last quarter, got more than a quarter of its nearly $50 billion of revenue from the Middle Kingdom.

No wonder Mr Xi wore the biggest smile of all when he met tech's royalty.  

Looking ahead in October

When writing about tech M&A deals, it is very hard to ignore China’s President Xi Jinping.

His meeting with his US counterpart Barack Obama will provide endless fodder for analysis on numerous issues, particularly the question of cybercrime. 

The U.S. and China are engaged in a tug of war. An heir apparent wants to take the crown of an aging superpower. That superpower alleges it is being usurped criminally by hackers. 

America alleges Chinese corporations and individuals, with the covert support of the Chinese state, engage in commercial espionage. Mr Xi strongly denies this.

"China is a strong defender of cyber security," says Mr Xi. "China is also a victim of hacking attacks."

So there! There is a silver lining of course.

Cyber security firms are certain to secure further funding; about $2.4 billion was invested in such companies last year. In 2013 the figure was about $1.2 billion. 

Presumably cyber security valuations, amid a Silicon Valley bubble, will only climb higher in October and during the rest of 2015.