For M&A investors, 2021 will be a year to remember. How will 2022 stack up? As we head into the new year, Harris Williams Industry Group Heads share their views on which trends will drive growth, key investor considerations, and the opportunities to be found in each of the industries we cover. We look forward to pursuing these opportunities in partnership with our clients in the months to come.
How do you feel about M&A conditions heading into 2022 within your industry?
2021 was an incredibly active year for M&A in technology, highlighting how ubiquitous software has become, the sector’s resilience, and its ability to attract large amounts of capital.
Looking ahead, nothing indicates those conditions will change. Valuations have continued to rise past what we thought was a high-water mark. The velocity of capital deployment has increased too: private equity firms that invest in tech have been raising new funds with durations between two to three years versus four to five years. Investors are putting more capital to work faster and are generating returns as good as, if not better than, ever. As such, we believe technology deal volume and valuations will remain very strong unless something drastic changes in the marketplace.
What should M&A investors keep top-of-mind in your industry this year?
Other than the labor constraints affecting all industries, 2022 does not bring many new “watch-outs” for investors in technology. We believe investors have significant runway to develop platforms combining individual solutions into comprehensive service offerings.
Name a few of the most significant trends that will drive growth in your industry in 2022.
The key trend is increasing adoption of technology as a critical solution to today’s most important business challenges. Software and automation are fundamental to the digital transformation that is occurring within enterprises and enabling them to operate more efficiently. The challenges in the labor market are being addressed by artificial intelligence, machine learning, and data-centric workforce management solutions that help organizations optimize employee retention and productivity. In healthcare, the strategic imperative to leverage technology solutions in pursuit of the quadruple aim of improved clinical outcomes, lower cost, and better experience for patients and clinicians has never been greater. Governments are using tech to modernize how they interact with citizens, a trend with an especially long runway given many agencies’ relatively low levels of technological sophistication. Suffice to say that technology loves a challenge, and the opportunity for investors is to build companies that can solve those challenges more effectively than the competition.
How has your team delivered exceptional client service in this busy market?
Communication has become much more important in this fast-moving, remote environment. This has always been a focus for us, but over the past year it became a critical differentiator. Being proactive with conversations, having the tough discussions as quickly and openly as possible, listening carefully and adjusting plans accordingly—all of those practices have helped us become more efficient, precise, and targeted while winning the trust of both buyers and sellers. That’s a powerful combination in markets with this much activity.
The Harris Williams Technology Group has deep domain expertise in software and technology-enabled services and dedicated focus areas across a variety of vertical software applications and end markets. For more information on the Technology Group and its recent transactions, visit the Technology Group’s section of the Harris Williams website.
To learn more, please contact our senior bankers.