Regardless of the size or growth phase of your business, it always pays to keep an eye on M&A trends. As we saw in 2017, unexpected slowdown in business merger and acquisition deals can catch startups and VCs unawares. Don’t let that happen to you – stay up to date with all the newest developments.
The Slump in Tech M&A activity Might Be Over
In 2015 and 2016, tech M&A was booming. Both years saw a total of global tech M&A transactions worth more than $500 billion – the market was back to the pre-bust levels seen in 2007. Quite unexpectedly, that trend slowed down in 2017 with tech M&A totalling less than $ 325 billion. VCs had bloated portfolios with the decrease in the number of exits, and the market’s slowdown seemed somewhat somber. But 2018 brings good news.
It seems that 2018 is set to reverse that M&A trend. Early in 2018, global tech executive’s confidence in the global economy increased to more than 80%. The optimism about earnings in 2018, paired with increased liquidity in credit markets and the tax reform plan that leaves large firms with more cash than expected, has turned the tide. 2018 has all the markings of another boom year for tech M&A activity.
Non-Tech Companies are Joining In
Technology is no longer only for tech firms. Cloud computing has become ubiquitous, the internet of things is permeating more markets, and in industrial sectors the rise of preventative maintenance practises requires real-time analytics and offline data capturing capabilities. In addition to the changes in technology, there has been a new realization in strategy: buy a tech company that has this all figured out, rather than to build it yourself. This M&A trend shows a lot of promise for tech companies looking to be acquired: the pool of buyers is getting a lot bigger.
High Tech is Leading the Way
As might be expected, the most advanced technologies are those that everyone is most eager to acquire. 2018 is likely to bring a lot of opportunity for tech companies working in the fields of machine learning, augmented reality, artificial intelligence, virtual reality, and real-time analytics. In addition, tech firms leading innovation in security is in an especially favorable position: security is becoming an ever more pressing strategic concern.
China is Catching Up
The big five in China (Tencent, JD.com, Alibaba, Baidu and Huawei) have been increasing the pace of their acquisitions of tech firms outside of China. As their global operations grow, this trend is set to continue.
Consult Expert M&A Lawyers
As a business owner, a pending merger or acquisition will have even more direct consequences. In that situation, it would be best to speak with an attorney before trying to work on any deal. If you are looking for an attorney for your M&A, you should visit LawTrades. Our attorneys have experience with mergers and acquisitions and have helped others through these types of transactions. We offer free initial consultations and start-to-finish project management.