Technology has already posted stellar performance so far this year, leading league tables with $511 billion in Q2 deal value alone. Such records often precede a dip as the market recalibrates: obvious targets are already acquired, conglomerate debt levels force a slower pace of dealmaking or divestitures, rising valuation multiples give would-be buyers pause. Not so for this rally, according to a recent survey of tech corporates and private equity investors. Private equity deal pipelines appear to be especially robust in the technology sector, with nearly a third of the poll’s PE respondents reporting plans to ink four or more deals in the space in 2022.
That sentiment isn’t isolated to financial sponsors. Over three quarters of the Morrison & Foerster survey’s 300 global M&A professionals expect more deals by volume next year than the current record-breaking deal flow. Cloud technology, customer relationship management, and business intelligence / data analytics are expected to be the focus of future takeover interest.
But how? Interest in high-growth companies and capital overhang from the massive special purpose acquisition vehicles raised earlier this year seem to be contributing factors. As those vehicles look to deploy funds, deal activity will rise apace.
“It’s a broad-based market,” says Solomon Partners’ CEO Marc Cooper of the ongoing pace of M&A activity, noting that few sectors have yet to benefit from the onslaught of deals.
AT&T’s divestiture of its WarnerMedia unit to Discovery for $96 billion was one of the sector’s largest transactions. That deal came months after Apollo’s $5 billion acquisition of Verizon Communications Inc.‘s media assets.