Technology is one of the sectors which looks most ripe for M&A activity, according to the latest KPMG Global M&A Predictor report.

Forward P/E ratios (market capitalisation compared with earnings) are ‘only’ down by 3 per cent in the technology sector, whereas overall P/E ratios are down some 14 per cent over the last 12 months for UK companies.

At an industry level, global M&A appetite is highest within the telecommunications sector where forward P/E ratios are up by two per cent, thanks to the increase in markets (nine per cent) outstripping expected earnings (eight per cent). It is the only sector whose P/E is in positive territory, although non-cyclical consumer goods is not far behind at zero.

“While many industry sectors are likely to be entrenched in low-demand economies in the short term, technological advancement could prove to be one of the exceptions, as companies at the forefront of innovation find ways to lead us into the future; be it web-enabled television replacing digital in homes; music and sporting events bypassing traditional media companies to go direct to market or social network sites becoming platforms for all web services, such as e-retailing, communication and media,” says Jonathan Stankler, technology M&A partner at KPMG. “As a consequence, technology companies in the mobile data space and the cloud are well positioned to deliver strong growth going forward. In addition, a myriad of technological advancements are providing stimuli to the deal market, as companies seek to share IP and access technology-hungry environments.”