BY Fraser Tennant
Tech M&A deal volumes are set to increase in 2023, with average values expected to rise over the same period, according to a new tech M&A survey report by Morrison Foerster and Mergermarket.
In ‘Cutting Edge: Tech M&A Is Powering Deal Markets’, it is claimed that dealmakers are cautiously optimistic about 2023 and view 2022 as a year of reset. The survey also found that 80 percent of private equity (PE) firms and 71 percent of corporates expect tech M&A deal volumes to increase in the next 12 months.
In term of deal value, through the first three quarters of 2022, technology, media and telecommunications (TMT) deals announced worldwide were worth a combined $887.4bn, behind 2021’s historic run but well ahead of 2020 and the preceding years .
Additionally, the survey report shows that the top driver for tech M&A deals over the next 12 months will be keeping pace with technological advances, mitigating risk through joint venture and club deals, and addressing concerns around antitrust, environmental, social and governance (ESG), and shareholder activism.
“I am emboldened by the results of this year’s tech M&A survey,” said Brandon Parris, co-chair of the global M&A group at Morrison Foerster . “Despite market volatility, global dealmakers continue to prioritise technology acquisitions, especially in heated sectors like artificial intelligence and machine learning.”
Additional survey findings include: (i) 62 percent of corporates outlined technological advancement as the most frequently referred to driver of tech M&A strategy; (ii) 46 percent of North American dealmakers and 43 percent of their peers in Asia Pacific expect antitrust scrutiny of tech M&A to become significantly stricter over the next three years; and (iii) survey respondents expect ESG considerations to grow in importance when it comes to choosing their tech M&A targets.
Mr Parris concluded: “While deal numbers for 2022 were never going to reach the historical peaks of 2021, deal activity remains steady, and dealmakers are cautiously optimistic for the future.”