10 PE firms share strategies for tech M&A
Technology permeates many of today’s private equity deals, and PE firms are hot on the trail of innovations that will drive sustainable value to customers and make companies more efficient, more effective and less expensive to run. Among the developments appealing to PE investors are: artificial intelligence, data management, data virtualization, digital marketing, healthcare IT, industrial automation, the Internet of Things, machine-to-machine learning, payment processing and Software-as-a-Service.
“Technology, in and of itself, is invading every end market, and it is driving companies to be more competitive than their peers,” points out Richard Lawson, CEO of tech-focused PE firm HGGC. “PE firms will continue to look to invest in companies involved in updating end markets that are still steeped in outdated technology, such as retail stores, car dealerships, market research, insurance providers and the legal/patent market.”
As PE firms consider the tech landscape, they are watching Amazon.com Inc. (Nasdaq: AMZN) closely. “We are always thinking about how we can help companies that are going to get dislocated and disintermediated by Amazon,” says Lawson. “End markets everywhere are being changed by Amazon. As Amazon scales, it will challenge all kinds of industries and it will have a cascading effect across all sectors. You are already seeing more companies trying to connect their brands with consumers in new ways.”
To gain more insights into what kinds of tech deals will dominate the field in 2019, Mergers & Acquisitions reached out to 10 private equity firms that are active investors in technology. These include a mix of generalist and specialist firms. Here are profiles of the firms, outlining their strategies and investments in tech.