Putin’s war has caused massive jitters in the public and private tech markets. Public new issues have been suspended and trading values continue to gyrate wildly. On the private M&A and financing front, we hit some rough waters in early March, but deals are back on track; closings and new pitches are at full throttle. No signs yet that the war has materially affected the underlying fundamentals of the technology industry, but it will at some point. All that said, the tech markets will eventually settle down and continue their high velocity pace albeit, at lower valuations.
Annual Tech M&A deal value has almost doubled from $500B to $900B post-COVID while volume has surged from 3,700 per year pre-COVID to just off historic highs at 4,200 YTD ’22 run rate. Tech private financings have doubled in value from $200B pre-COVID to $400B post-COVID. Private financing volume has jumped from 12,800 to 13,700 YTD ‘22. Tech IPOs, which hit all-time records in ‘21 with 168 deals raising $150B, are shut down so far in ’22 – 4 deals for $240M. Our friend Mr. SPAC in ’22 has announced 50% fewer IPOs and 60% fewer acquisitions than the record ’21 pace. SPAC volume and performance will remain in the doghouse for some time to come.
Meanwhile, PE-led take-privates are off to the races after a record year in 2021 which saw 52 tech deals for $137B in value. This year is tracking at $200B in value, exceeding the combined total of de-SPACs and tech IPOs in yet another sign that private markets have wrested control from public markets at least for the time being.
Strong tech M&A volume is being driven by a wave of digital transformation in the wake of the pandemic crisis. It is backed by a highly capable and deal minded global player group awash in capital consisting of PEs with an historic $1.3B in dry powder, public strategics with highly valued stock and historic cash reserves, and SPACs seeking targets with a massive $550B in buying power. The top 300 tech PE funds now manage 4,000 portco’s which will do roughly 1,500 acquisitions in 2022. Many of our bootstrapped founders will also continue to come to market this year as valuations are lower but still very attractive. The super high priced private minority deals that took their cue from public markets will continue but more discriminately. We will see a slow down in PE’s bringing their companies to market in full auctions in the first half of the year. That said, we continue to sell PE-backed portcos through a combination of full auctions, partial auctions, and one-on-one outreach. Software IPOs, however, are at a full stop for the moment.
© In the U.S., America’s Growth Capital, LLC dba AGC Partners, member FINRA/SIPC. In Europe, America’s Growth Capital Europe, LLP (Appointed Representative Alternatives St. James, LLP which is authorized and regulated by the Financial Conduct Authority). America’s Growth Capital Europe, LLP is a Limited Liability Partnership incorporated in England and Wales (OC368580). Its registered address is 6th Floor, 9 Appold Street, London EC2A 2AP. The testimonials contained herein may not be representative of the experience of other customers or clients. Testimonials are no guarantee of future performance or success. Deals marked with an “*” are non-AGC deals.
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