M&As: Tendencies And Projections

In our experience, spanning more than a decade, we’ve been deeply involved in numerous significant projects, affording us a front-row seat to observe trends and make informed predictions. A substantial portion of our portfolio comprises engagements revolving around mergers and acquisitions (M&A).

Current Trends

These days, enterprises focus more on weighing their strategic objectives and the opportunities M&A can offer and are more deliberate in choosing deals. Previously, the main goal for most of them was fast growth.

Last year, there wasn’t a significant increase in the number of deals, yet the trend is still positive. Companies use mergers and acquisitions (M&A) to grow, explore new markets, and meet customer demands for advanced technologies. Even though the overall value of deals is steady, tech companies are using M&A to expand and innovate, especially in improving artificial intelligence (AI) capabilities and strengthening data-focused operations.

The projects we completed were focused on helping companies be more efficient, with enterprises always trying to cut costs while increasing revenue. That’s why the tech sector is playing a key role in mergers and acquisitions activity, as technologies help companies maintain their competitive advantages and satisfy customers’ needs.

We should also highlight that cybersecurity is a key focus in M&As due to the increasing sophistication of cyberattacks. This is particularly evident with remote and hybrid work setups, which pose greater challenges for data protection. As a result, larger cybersecurity companies are partnering with smaller ones to enhance their capacity or incorporate specialized tools (often based on AI/ML) without having to develop them internally.

As for other industries, energy, biotechnology, financial, consumer, and industrial sectors were the most active in M&A deals last year. But they were motivated not only by growth perspectives and demand for new tech, but also by legislative incentives, renewed investor confidence, the global demand for sustainable energy solutions, and a ‘divest-to-invest’ mindset as well.

Observations and Projections

Our observations and experience allow us to make some predictions about the tendencies for 2024. Here they are:

  • AI and Data-Centric Operations: The strategic integration of artificial intelligence (AI) and data-centric operations has emerged as a focal point for tech M&A. From our projects, we foresee a continued emphasis on enhancing AI capabilities and bolstering data-driven strategies through acquisitions.
  • Cybersecurity: With cyberattacks becoming more advanced due to the usage of new instruments (like AI or deep fake technologies), this highlights the crucial significance of safeguarding your data. We anticipate a persistent trend of acquisitions in cybersecurity firms as companies strive to fortify their defenses against evolving threats.
  • Strategic Divestments for Focused Investments: Market movements indicate a strategic shift among enterprises, divesting non-core assets to redirect resources into reinforcing core businesses. This ‘divest-to-invest’ strategy is likely to drive targeted acquisitions aligning with long-term growth strategies.
  • Tech Evolution and Software Focus: Looking ahead, our observations hint at a surge in M&A activities centered around software companies, infrastructure enhancements, and AI-integrated platforms. This aligns with firms’ endeavors to carve niches in a tech landscape undergoing transformational evolution.

There’s a lot of uncertainty in the modern world, both economic and geopolitical, but the continuous demand for adopting new technologies positions the tech sector as a beacon of growth. M&A is a strategic imperative, and we’re sure their number will grow steadily this year. And we’ll be there to help companies that need our assistance.