Tech M&A will fly high over next 12 months, say dealmakers

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Dealmaking in the technology, media and telecommunications (TMT) sector is expected to soar over the next 12 months, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP). Transaction professionals surveyed in June gave the sector a score of 82.0 for the 3-month outlook and 80.6 for the 12-month outlook, much higher than the scores of 68.5 and 68.4 given to overall M&A.

Tech deals announced recently that demonstrate the sector’s momentum include the $13.7 billion purchase of Whole Foods by Amazon.com Inc. (Nasdaq: AMZN), which is expected to trigger an explosion of M&A in grocery stores, delivery services and related businesses.

Private equity interest in TMT is very high. Hollie Moore Haynes, a former partner at Silver Lake Partners, closed the debut fund for her Luminate Capital Partners at $265 million.

Even PE firms “that are not considered ‘tech shops’ in the usual sense are making significant investments in later-stage technology companies; however, these are seen as technology-enabled businesses serving traditional markets, rather than pure-play technology companies,” writes Rich Lawson, the CEO of tech-focused HGGC, in a guest article for Mergers & Acquisitions. HGGC recently invested in HGGC in Denodo Technologies Inc., a developer of data virtualization software.

Fueled by fears of ransomware and other attacks, cybersecurity is driving many deals.

Honeywell International Inc. (NYSE: HON) recently agreed to purchase cybersecurity provider Nextnine.

Another development driving media deals is over-the-top technology, as reporter Kamaron Leach writes in his Finance Finesse column. One respondent to our survey also mentioned “the continued impact of OTT and streaming services” on M&A.

Other sectors expected to experience high growth, according to our survey, are energy, consumer goods and retail, and manufacturing.

Mid-Market Pulse

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