Pivot Point: Technology M&A Outlook

New Year, New Opportunities

As we embark on a new year, our Industry Group leaders reflect on the changes spurred by 2020 — stories of novel products and services, shifting market trends, and new M&A strategies — and consider the implications for 2021. Access more industry perspectives in our related insights tab. 

tech_gh.jpgAmidst the many challenges of 2020, accelerated technology adoption has been a bright spot. Organizations and individuals around the world have turned to technology at an unprecedented rate to engage in business, education and training, healthcare, and other areas of daily life. By allowing so many activities to continue through the pandemic, technology has been a key enabler of our ability to rebound from the recession.  

Technology's starring role in getting through COVID-19 has benefited many enterprise software and services providers, particularly those focused on remote collaboration and Cloud migration. As a result, we're seeing strong buyer interest in those subsectors, particularly for top-quality businesses.

And while the pressure for private equity groups to put money to work hasn't changed, investment strategies have. The "flight to quality" has intensified significantly since the onset of COVID-19 across industries, including technology. Investors are paying a premium for A-plus assets and are warier of the Bs and even B-pluses. They are also far more forensic when it comes to diligence, and are staying focused on areas in which they've been successful before and where they have a clear angle and a good shot at prevailing.

For their part, strategic buyers that have performed well through the pandemic are seeking to gain share through M&A right now. Many of the subsectors in which we work are highly fragmented, and now is an excellent time for the survivors to consolidate smaller players looking for capital and growth support.

All of these shifts in behavior further intensify the supply/demand imbalance in the M&A market: There is more money chasing fewer opportunities, especially in educational technology, healthcare IT, and e-commerce infrastructure. That, combined with the accelerated technology adoption we saw in 2020, bodes well for a strong 2021 for M&A in the sector.

Click here to explore our technology industry experience. 

What are you most looking forward to?

Variety. As we all know, this COVID-19 lifestyle can get a bit monotonous. I'm looking forward to going into the office, traveling, and seeing colleagues and clients in person.

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