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

Piotr Chudzik

Managing Partner

Trigon Investment Banking - IMAP Poland

Mick Ohira

Managing Partner

DealHaus - IMAP Denmark