The Year of the Rabbit was full of surprises! Quite a few of them were negatives – mainly geo-politics. But there were also many positives, including a big tech-driven jump in the NASDAQ in 2023, which was up an amazing 43%. Crucially, a big fall in inflation means interest rates should pivot in 2024. That, and much excitement around generative AI, means Tech M&A confidence is on the rise.
Download PDF
ICON's UK IT Managed Services (ITMS) Snapshot shows that buyers have remained very active, with nearly 60 M&A deals closed in the sector so far in 2023. Highlights from the snapshot, which shows all the buyers and valuations, include: strategic buyers from adjacent sectors accounted for a chunky 61% of deals; foreign buyers account for less than one in four deals, and perhaps surprisingly, with the higher interest rates, over 50% of deals were still private equity related. We remain very active in the sector and continue to see really good buyer interest, which is great for building competitive tension. As a result, we see the better quality targets are still achieving >10x EBITDA.
Download PDF
Summers are quieter in M&A. This year was no different, despite the soggy weather. The biggest headwind though (to continue the weather analogy) was the fall in US bond markets, reveals ICON's UK Tech M&A Snapshot Q3 2023. Although inflation is falling, it is still high and investors now believe rates will have to stay 'higher for longer'. As a result, rates are at 20-year highs and longer dated bond yields are over 100bp higher than 6m ago. Investors no longer expect significant rate cuts ahead, dampening the big US tech rally.
Download PDF
Although 383 deals in the first half of 2023 is down on the 21/22 boom years, it is actually pretty comparable with pre-COVID numbers and looks increasingly like the 'new normal', reveals ICON's UK Tech M&A Snapshot Mid Year 2023. Near-zero interest rates had fuelled a wave of private equity-funded buyers. But these rates don’t look like returning any time soon with inflation looking sticky, particularly in the UK. There is, however, still lots of activity across both the software and services spaces.
Download PDF
The last few years have seen record levels of Tech M&A in The UK, driven by currency depreciation and near-zero interest rates which fuelled a wave of private equity-funded buyers. Both rates and currency cycles have reversed in 2023, dampening buyer enthusiasm in the wider M&A market. Yet, Q1 2023 was another busy quarter in Tech with over 200 deals completed. That is of course lower than the last two years, but remains in line with pre-pandemic numbers. With zero rates unlikely to be seen again anytime soon, this may represent the ‘new normal’.
Download PDF
Over 2500 deals worth $377bn in total value have been completed in the DTxS sector since 2021. Deal activity remained strong as enterprise Digital Transformation initiatives led to strategic and financial buyers pursuing capabilities across the services sector. This was particularly true with strategics as acquisitions cut across traditional boundaries in consulting, IT services and software. M&A multiples remain elevated despite public market headwinds, illustrating the continued interest in high-quality assets to help buyers move up the value chain.
Download PDF
Surprisingly, the number of UK tech M&A deals in 2022 was the second highest on record. Despite the global pandemic, war in Ukraine, falling equities, the highest inflation in 40 years, supply chain gridlock and a jump in interest rates, 972 deals were announced. While the number of deals was down -9% compared with 2021, impressively it was up 9% compared with 2019 (pre-COVID). Smaller and mid-cap deals proved particularly resilient.
Download PDF
The AI & DataTech sector is proving more resilient than the overall software industry. Fundraisings are setting new records and premium M&A deals are still closing. However, challenges do remain and understanding the intricacies of this crowded and complex sector is more important now than any other time in the past decade. ICON’s AI & DataTech Atlas report supports financial & strategic investors and acquirers and the startups themselves in best understanding the DataTech sector at a macro level and where financial and corporate development opportunities exist.
Download PDF