Investment bankers are having a field day. They’ve been helping their clients pursue a stunning amount of deals, pushing the phrase “Merger Mondays” back on to the front page.

What kind of volume are we talking about? More than $1 trillion worth of deals have been announced thus far in 2015, according to Dealogic. That puts us on pace for the second-busiest year of M&A activity ever (though still trailing the pace seen in 2007, a record-setting year).

The tech sector can always be counted on for a vigorous pace of deals, and this year is no exception. And the hottest industries within technology — adtech and datacenters — are leading the way. That makes this a fine time to focus on the companies that might soon catch a bid.

Digital Marketing
From 2008 through 2012, major tech firms such as Facebook, Inc. (Nasdaq: FB), Google, Inc. (Nasdaq: GOOG) and Yahoo, Inc. (Nasdaq: YHOO) spent a combined $6 billion in cash and stock to acquire small, privately-held advertising technology firms. Fast forward to 2014 and that level of adtech deals took place in just one year. And the industry M&A has already surpassed $5 billion thus far in 2015, setting the stage for a record year.

“We believe the scale of M&A activity in ad tech is evolving from sub $500 million private transactions to more transformative multi-billion dollar deals, and we see several factors likely to accelerate the pace of M&A,” note analysts at Goldman Sachs. Verizon Communications, Inc.’s (NYSE: VZ) recent announcement that it intends to acquire AOL, Inc. (NYSE: AOL) is further validation to the theme that ever-larger adtech companies are now in play.

Several firms are now receiving ample M&A buzz, and could receive a buyout offer in coming quarters. One candidate: Rocket Fuel, Inc. (Nasdaq: FUEL), which saw its shares approach $70 back in 2013 but now trades below $10. The company grew too quickly and let expenses get out of control, but is still seen as possessing a strong technology base and an impressive customer list.

France-based Criteo (Nasdaq: CRTO), which I profiled six months ago, also holds appeal. Analysts at Goldman Sachs think “that Criteo could be a valuable asset to several in the digital ecosystem including agencies, publishers, software and ad tech pure plays,” and they see 30% upside to their $60 price target.

Investors may also want to check out Brightcove, Inc. (Nasdaq: BCOV), which has gained considerable expertise in the area of video-based ad delivery technologies. Its shares have languished in recent quarters as companies slowed their spending on online video delivery services. But Brightcove has begun to speak of an improving sales environment in recent quarters.

Datacenters
The advent of the “internet of things,” coupled with existing growth in cloud computing, is bound to cause web traffic to explode. As a result, many companies are offloading their data traffic management to outsourced firms, known as datacenter operators. And as is the case with the adtech niche, this too, is an industry niche undergoing rapid consolidation.

#-ad_banner-#The key to success for datacenter operators is to keep the supply of services below the level of demand. In past years, these firms installed too many servers, leading to price wars. These days, the firms are taking a different path to growth. Analysts at Oppenheimer & Co. “believe operators are looking toward acquisitions to gain scale rather than committing capital to overbuilding.”

Case in point: Equinix, Inc.’s (Nasdaq: EQIX) recent move to acquire England-based Telecity for $3.6 billion.

In response, analysts believe that Interxion Holding N.V. (NYSE: INXN), a key rival to Equinix, will also seek out its own prey. Potential candidates include CoreSite Realty Corp. (NYSE: COR), a real estate investment trust (REIT) that owns a national network of datacenters; QTS Realty Trust, Inc. (NYSE: QTS), another industry REIT; DuPont Fabros Technology, Inc. (NYSE: DFT); and perhaps Interxion itself.

A handy rule of thumb to note: past deals in this niche have been valued at around 12 times trailing EBITDA (earnings before interest, taxes, depreciation and amortization), according to Oppenheimer. Equinix’s proposed purchase price for Telecity values the deal at around 15.5 times trailing EBITDA, perhaps signaling that a land-grab mentality is now in place.

Risks To Consider: Shares of some of these potential acquisitions candidates have already started to rise in anticipation of a buyout, and if deal-making slows, they may be hit by profit-taking.

Action To Take –> Investors tend to profit by owning smaller firms that become targets in a consolidating industry. Yet the potential acquirers also hold great appeal. Analysts, for example, broadly applaud Equinix’s growth-through-acquisition strategy. Its shares have risen 608% over the past decade (compared to 146% for the Nasdaq), and it is now using the stock as a lure to snap up smaller rivals at full valuations. Success for the big fish has translated into success for the prey as well.

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