M&A Market Dynamics – Software & Technology
- The second quarter of 2022 saw a noticeable decrease in both deal volume and value, with 1,282 transactions in the quarter combining for $216B in value.
- Given the economic uncertainty, buyers are more attentive to higher quality assets and are willing to pay a premium for tier 1 companies. The slowdown in deal activity indicates hesitancy in the market for less attractive assets in 2022, whereas those assets were still pursued in 2021’s record year.
- Q2 2022 represents a sizeable decline compared to Q1 2021’s robust activity, with total deal value down 28% and volume down 36%. The quarter was buoyed by a few large deals, and M&A activity remains strong relative to historical years and was expected to cool coming off a record 2021.
Sector Spotlight – Supply Chain Tech
Supply chain tech encompasses a range of functions including enterprise supply chain management, warehousing tech, freight tech, and last mile delivery. The turmoil of the past few years has exposed the fragility of global supply chains and increased the prevalence of this industry. Price fluctuations, hoarding, misinformation, product returns, inflation, port congestion, trucker strikes, pandemics, and wars are just some of the issues supply chain tech looks to solve.
Investors are sensing the opportunity brought on by these problems and are placing significantly more capital into supply chain tech. The industry is still young with significant room for growth driven by investments in system dynamics, predictive analytics, real-time data integration, and artificial intelligence. Evolving these technologies to further connect global supply chains is an exciting opportunity for many investors.