While we have experienced fluctuations in volume and value over the past 10 years, there has been an overarching upward trend in Tech M&A and there is every reason to be bullish as we move towards the next decade. Technology is being integrated everywhere – into brick & mortar retail, buildings, cars, clothes, factory floors, meters, refrigerators, streets, and even into our bodies. You can say just about into everything. Some technologies, such as AI, blockchain and IoT are finally mature enough and are changing what is possible in many aspects of our lives.
Pioneering scaleups lead the drive for innovation, while bigger technology companies acquire to stay ahead of the competition. Non-technology players are buying technology companies to reinvent themselves or to simply survive in converging markets. Private equity firms have deep pockets and a strong drive to build their portfolios of technology investments. When you put all these things together, it makes for an exciting tech M&A landscape, especially when you look at certain sectors.
Tech Trends in M&A 2019 – Automotive Tech
Automotive technology is a sector where there has been immense innovation and M&A activity. One of the key drivers for this is the development of self-driving cars, otherwise known as autonomous vehicles (AV). There is a race between some of tech’s biggest names, such as Google’s Waymo, Uber and Tesla, to be the company that brings AV to critical mass. This race requires a vast amount of technological innovation and these tech giants have money to spend. As we move towards 2020, the big players are likely to acquire smaller companies who have the tech (and the tech teams) that can help them get ahead.
In addition, technology is advancing in other areas of the automotive industry. Connected car technology is especially exciting as car-makers, dealers and even insurance companies can benefit from what it delivers. For example, Zurich Insurance acquired Bright Box, a tech company pioneering the AI-powered connected car platform Remoto. Similar deals are likely to happen soon.
Tech Trends in M&A 2019 – Digital Marketing
The digital marketing sector, including agencies, marketing service providers and marketing software, still has huge growth ahead. For example, AI and machine learning is changing the way companies market to their customers, mobile technology offers a growing and effective channel for brands to convey their messages. There is also rapid growth in online use in China and India that Western brands want to tap into.
Big players in the industry are acquiring to stay ahead. For example, in 2018 Accenture bought the Chinese digital marketing agency, HO Communication and this trend looks set to continue.
Tech Trends in M&A 2019 – Enterprise Application Software and SaaS
The software that powers big business is a big business in itself. Companies such as SAP and Salesforce have become household names in this sector. Enterprise Software and SaaS is growing as more and more businesses move their information technology and data to the cloud. As with the other sectors mentioned, larger companies are acquiring innovative start-ups and disruptive leaders in order to freshen up the services they can offer their customers. Recent deals include SAP purchasing Qualtrics, a SaaS company specialising in survey software, for $8 billion in cash.
This is also a sector attracting interest from private equity companies. As PE firms compete to add more businesses to their portfolios, company valuations rise. Looking forward to 2020, expect this to continue.
Tech Trends In M&A 2019 – Healthtech
Technology is the driving force behind making healthcare more effective and affordable. Whether it’s technology that can help with diagnosis, virtual reality (VR) tech to help train doctors or connected technology that helps monitor patients, innovation brings benefit for us all.
The financial rewards for being a leader in this area are huge, as a result big healthcare companies are eager to make acquisitions in order to gain an edge in the market. Plus, companies from outside the sector, such as Amazon, are looking to enter the sector, to disrupt, transform and ultimately profit from it. In June of 2018, Amazon acquired the online pharmacy company PillPack for $1 billion. In the next decade, as problems associated with the West’s aging population grow, it’s likely we’ll see more M&A activity.
‘The response of incumbents in healthtech to a new competitive pressure will undoubtedly be to increase the intensity of their M&A activity.’ – Hampleton, Tech M&A Outlook 2020
Hampleton – The Future of Tech M&A Dealmaking
At Hampleton, we are aligned with and look forward to continue helping our customers achieve success through growth finance and M&A, long into the next decade and beyond.
Hampleton’s dealmakers have bought and sold over 100 fast-growing tech businesses. We provide an unrivalled level of expertise and advice to tech entrepreneurs and companies looking to accelerate growth and maximise their value.
To celebrate our recent successful partnerships with entrepreneurs and business founders, we brought several founders and
Keep in touch with Hampleton as we progress towards 2020. Download our Tech M&A Outlook 2020 report today.
Founder, Hampleton Partners
Miro Parizek established Hampleton in 2013 with a group of fellow deal makers and technology industry entrepreneurs, uniting hands-on industry expertise and seasoned transaction experience together for the optimal M&A advisory.
Miro has been providing M&A advisory services to the technology industry since the pre-dot.com era and has managed scores of transactions supporting privately-held sellers and publicly-traded companies. Miro has degrees in International Finance from the Wharton School of Business and in Computer Science from the Moore School of Engineering.