Global M&A Analysis
Global technology merger and acquisition (M&A) activity slowed in the second quarter of 2023, indicating that strategic acquirers have become remain risk-averse amid economic uncertainty. There are some signs of resilience, however, with M&A valuations rebounding slightly after recent declines.
The following analysis of Q2’s and today’s M&A activity is derived from Pitchbook, Crunchbase and CB Insights reporting and data:
M&A deal volume fell to its lowest level since the 2020 Covid lockdowns, down 6% quarter-over-quarter. However, aggregate valuations across deals rebounded to $1.1 trillion.
High-value deals worth over $100 million made up a smaller portion of activity compared to pre-2022 levels. However, the number and median valuation of these larger deals increased in Q2.
The median M&A valuation in Q2’23 increased to $45M level, in line with historic trends
Europe saw the most tech acquisitions for the sixth straight quarter, but the US continued to lead in $100M+ deals.
Strategic buyers pulled back, doing the fewest deals since 2020, while financial buyers – such as VC and PE – also declined year-over-year. Among financial buyer-led deals, private company buyouts dominate.
Smaller companies with 50 or fewer employees made up two-thirds of all tech acquisitions. But larger companies were more common targets in $100M+ deals.
Institutionally-backed companies (viz., corporate VC investments) saw higher valuations compared to the last funding round, rebounding after two weak quarters.
While tech M&A activity remains soft compared to 2021-22 activity, Q2 data suggests some stabilization and selective indications an upward tick. Strategic acquirers appear cautious but open to compelling deals, while valuations for larger tech targets are recovering. However, overall deal volume remains depressed.
VCs are likely hoping for a return to higher M&A valuation levels, or they may need to settle for Oberon instead of Screaming Eagle Cabernet Sauvignon.