What do M&A deals in tech look like?
The tech sector is one of the fastest growing sectors. Thanks to massive fundraising, tech startups and companies are growing steadily. For example, we can mention the unicorn Sorare, which has raised nearly 680 million dollars. This gap is all the more visible in the M&A sector, where tech dominates all deals. And such dominance leads to a tenfold increase in interest in this area. So who are the new investors in this sector? What will the tech M&A sector look like in a few years?
Read more: What does the PwC report on the future of M&A say?
Large companies are increasingly focusing their M&A deals on tech
Although we don't necessarily realize it, our society depends on technology: payment methods, teleworking, communications or even health services, everything is driven by technology. This creates a huge gap between those sectors that manage to innovate and make technology an asset, and the others. The same observation can be made for companies. Innovation is now at the heart of competition.
All this explains the dynamism of M&A in the tech sector. Technology is today a driving force for the merger or acquisition of a startup. To accelerate their growth, generate revenues in an automated way and ensure the digitization of their processes, startups are forced to turn to tech.
Read more: Where are the unicorns of tomorrow born?
M&A transactions are mainly carried out by large companies, pioneers in the tech sector
Historically speaking, large companies have been the ones doing M&A in the tech market. Although the M&A process is common to all transactions, changes are made according to the technology sectors and the specialization of the companies.
For example, the advertising sector, adtech, is often bought in the early stages of development to avoid the emergence of fierce competitors. On the other hand, biology tech companies are bought at maturity, as this is a sector where the maturity of the company is paramount.
It is therefore notably M&A transactions that have enabled today's large companies (Apple, Netflix, Facebook, Google, etc.) to become the giants they are today. For instance, Google bought YouTube and Maps in order to develop its services on the horizontal channel.
Read more: The 10 most important acquisitions in the history of M&A
What are the innovations of M&A in tech?
In addition to the reasons mentioned above, we must add the countries that are pioneers in innovation. For example, the United States and the United Kingdom represent the most innovation-friendly markets (Web3, creator economy, NFT, etc.). As a result, they are also the source of the largest number of M&A transactions.
In addition, a more responsible and respectful European tech is also emerging, providing a rare opportunity for investors in these markets. In doing so, the European Union, through projects such as Gaia-X, seeks to stimulate this sector in order to gain the attention of new foreign investors. Finally, the latest development is that startups themselves are starting to carry out M&A transactions. With increasingly scalable models, startups are rapidly deciding to acquire external companies in order to develop external growth.
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