24 Feb 2023

Transactions in the tech industry – be it fundraising or M&A – tend to follow trends, and those trends tend to parallel emerging technologies and changes in economic cycles. ICON’s Head of US Tech Investment Banking Ben Kolada discusses the latest direction of tide from the West Coast.

With all the changes we’ve seen in the past year, we are at the cusp of a new, yet all too familiar, trend in tech transactions.

A decade ago, Google, Yahoo! (remember them?), Facebook, and Twitter were in a constant M&A arms race for deals focused on talent. Mobile then took off, and we saw a wave of mobile-related fundings and M&A. The market saturated, leaders emerged, and that was the end of the mobile wave. More recently, deals are being driven by AI, the metaverse, cybersecurity, and digital transformation.

While the industry’s dynamism means emerging technologies will always drive different transaction trends, the near-term influencer is predominantly financial. It’s a ‘back to the basics’ for fundraising and M&A. Gone are the days of product/TAM-focused growth-at-all-costs fundraisings, here are the days of the financial transaction.

To address this trend, companies seeking capital or an acquirer need to focus on the fundamentals: sustainable revenue growth; EBITDA margins; customer acquisition; maximising the potential of current customers; and cash generation.

KPIs are the key characters in the story, but CEOs and CFOs need to define those characters, show what they’re doing and how they relate to the financial story. Talking with outsiders to get unbiased perspectives is a crucial component of prepping for a transaction. Get in touch to find out more.