According to industry watchers, 2024 is expected to see a revival in mergers and acquisitions (M&A) and venture capital deal-making activities. Tech startups looking for an exit strategy and large corporations desiring to diversify and expand are likely to stimulate this trend.
First quarter results showed a slight uptick in deal-making activities, totaling 413, a 20% increase from the prior quarter. While this is a promising upward trend, we’re still slightly off the pace of the 421 deals in Q3 of 2023.
Noteworthy transactions in Q1 included significant sales and acquisitions by Cox Enterprises, Francisco Partners, and Novo Nordisk, among others. Goldman Sachs invested significantly in O9 Solutions, and Thoma Bravo purchased Guidewire.
Increasing regulatory challenges complicate the M&A landscape, with deals taking longer to conclude and often resulting in increased costs. These factors might discourage potential buyers. The need to navigate complex global regulations is more urgent than ever.
Forecasting 2024 tech industry M&A trends
Despite the uncertainty, the current M&A market trends are positive. The active IPO market can benefit M&A activity by establishing market prices. With the boom in tech-industry M&As, there’s a significant shift towards digital transformation. However, careful due diligence, clear communication, and post-merger integration are crucial for success.
Companies are making strategic deals related to artificial intelligence. Increased cash reserves in companies like Nvidia and Apple will likely be invested in emerging startups that focus on AI technology. This activity strengthens their market position and encourages industry innovation.
The vast amount of uninvested capital in private equity points to a possible increase in deal-making activities with venture capital-backed startups. This scenario could trigger intense competition among startups vying for the same capital pot, raising the stakes in the capital-raising journey.
