Top Four Trends Affecting Mergers and Acquisitions in the Software Industry in 2024
In the second of our new IMAP M&A Industry Insights video series, we hear from Mick Ohira and Piotr Chudzik who take a deep dive into the Software Industry and outline the Four Key Trends affecting M&A activity in the sector this year:
Trend 1. AI a Contributing Factor in Increasing Number of M&A Deals
- AI and innovation proving increasingly important
- However, still large number of deals globally in more conservative parts of the sector
Trend 2. “New Tech” Small-and Mid-cap Companies in High Demand
- Investors actively seeking companies with proprietary technology or leaders in vertical market niches
Trends 3. Pent up Demand from Private Equity with Money to Spend
- Active across various software sub-sectors
- Foreign investors acquiring small companies to develop platforms operating outside of Poland
- More PE to founder deals than PE to PE
- PE with Software portfolios expected to come to market in 2024
Trend 4. Hesitant Sellers in 2023 Now Taking the Plunge
- Sellers previously waiting for improvement in market conditions are now ready to go to market
Valuation Forecast:
- Decoupling between public and private markets
- Valuations in the public market have come down but remain at a very high level
- Private sector more cautious in terms of company valuations
- Shift from high growth companies to profitable growth companies
- Best performing company's multiples significantly higher than median multiples
- High performing areas include Fintech, Sales & Marketing software, Digital Health, and Enterprise Solutions software
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