- February 3, 2020
- Posted by: webo
- Category: Mergers And Acquisitions
10 Biggest Trends in Mergers and Acquisitions In January 2020
We’re just touching one month into the New Year, and more than 25 technology merger and acquisition (M&A) deals got concluded in such a short time frame. Several of the buyouts include MSPs (managed IT services providers), IT consulting firms, ISVs, and private equity firms. These are the 10 biggest trends in mergers and acquisitions we’ve seen in January 2020.
Many of the investments in procuring new technologies get pushed by legacy companies keen to defend off rising competition. Several direct-to-consumer businesses have their tech stacks and can utilize such abilities to distinguish themselves from the more significant established.
Transactions that extend the areas in which a company strives — as opposed to supporting it scale up its current business — will drive merger and acquisition (M&A) exercise this year because of the dynamic that accelerated the majority of these ventures in the last two years is still in place.
The transactions are engaging because they’re a means for businesses to become a member of the technology explosion that’s reworking businesses.
But what bearings can we gather from the first 25 technology M&A transactions of 2020?
The ten initial trends for technology M&A in 2020 are:
- Channel M&A Includes More further Than MSPs: Five of the New Year’s leading 25 M&A deals link MSPs — including such buyout and investment targets as Dataprise, InterDyn Artis, and the West Monroe Partners’ MSP division. No doubt, MSPs prevail as ardent M&A targets mostly because (A) the business is highly fragmented, (B) private equity firms desire recurring revenues, and (C) capital continues to be cheap to acquire and employ to buyouts.
- Talking of Private Equity: Certainly, PE firms persist in getting aggressive. Acquirers and investors include Abry Partners, Accel-KKR, and Trinity Hunt Partners. More major M&A transactions and private equity purchases are a secure bet. Admittedly, private equity investors are lying on a record $1.5 trillion in the capital, according to Preqin. Yes, that’s the biggest on history and more significant than double what it stood five years before. Between that fact, private equity companies are struggling to secure investments.
- Application Partner Consolidation: M&A in the SAP, Salesforce, and Microsoft partner ecosystems continues to be healthy. Of the initial 25 M&A deals of 2020, six have included these partner ecosystems.
- ServiceNow Partner M&A: No transactions to date. Although we presume M&A deals concerning ServiceNow partners will happen in the subsequent few days, with large ServiceNow partners acquiring boutique firms in the fast-growth business that experiences from a skill deficit.
- Cybersecurity Takeovers: The division remains heated. Confirmed purchases in recent days involve Armis, Avnet Data Security, Bay Dynamics, Segasec, and Symantec Cyber Security Services.
- Vertical Businesses: Five of the first 25 deals include vertical business IT specialists in so areas as health care, government, and financial services.
- Repeat Buyer: Accenture rests one of the most productive M&A partners, having now secured down two transactions in 2020. We presume the firm will buy mid 20 and 40 technology firms this year. Most utmost will concentrate on the cloud, cybersecurity, and digital transformation services.
- Debt?: Low-interest prices and loads of lenders indicate some M&A transactions may get leveraged up with loads of debt.
- Valuations: In several buyouts, cost and purchase price remain strictly guarded mysteries. Just three of the 25 ventures unveiled the purchase price, and none presented the EBITDA multiple.
- Bidding War: Microsoft and Cisco Systems emerge as potential purchasers of cybersecurity firm CrowdStrike while Palo Alto Networks could be a target of VMware or Alphabet’s Google. In its 2020 projection, RBC Capital maintains that if Microsoft does not acquire a cybersecurity company such as CrowdStrike, the behemoth could target software stocks Workday or Twilio.
Renewed enthusiasm in the tech division from strategic and financial acquirers equally and the demonstrated significance of M&A as a medium for growth could bode favorably for a rally in 2020.