M&A Market Dynamics – Software & Technology
- After a strong uptick last quarter, broader technology sector total deal value fell 23% compared to Q3 2023 and finished closer to the prior four quarters’ average, with $78B in transaction value. The decline stems from software specifically, with software total deal value dropping 66% while other technology sectors increased nearly 60%.
- Relative to Q3 2023, Q4 2023 software deal volume declined 23%, with 491 transactions in the quarter. This represents the lowest quarter for software deal volume since Q2 2020, when transaction activity was significantly disrupted by COVID-19. Despite the decrease, activity remains higher than pre-pandemic levels.
- Though 2023 was a challenging year that continued the fallout from the second half of 2022, many within the M&A community expect a meaningful improvement in 2024. According to a survey by 451 Research, over 80% of respondents anticipate an increase in tech M&A activity in 2024. The forecast on tech valuations is more mixed, with half of respondents expecting an increase and the rest split between holding even or further declining. Survey sentiment is largely optimistic as acquirers are less concerned about the impact of inflation on acquisitions and more positive about growth.
