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Feb 10, 2023

Tech-focused sectors buck negative M&A trend

Advisory firm Ciesco releases report on tech, digital, media and marketing sectors

While last year saw a sharp decline in overall M&A activity, deal volume across four tech-focused sectors bucked the trend, according to new research from Ciesco, an advisory firm.

The report, which looks at M&A across tech, digital, media and marketing, finds there were 2,095 transactions in 2022, a rise of 20 percent over the previous year.

The majority of activity (56 percent) last year took place in the US and the UK, says Ciesco. In total, the US accounted for 888 deals while the UK delivered 293.

Chris Sahota, founder & CEO of Ciesco
Chris Sahota, founder & CEO of Ciesco

Deal value, however, saw a sharp decline of 51 percent between 2021 and 2022, says the report.

The authors note that this figure accounts only for deals with a disclosed value (just 13 percent of the total) and excludes mega-deals worth more than $10 bn, of which there were three in 2022.

‘Business leaders were already in the process of reimagining their businesses to adapt to the ‘new normal’ following the Covid pandemic years,’ says Chris Sahota, founder & CEO of Ciesco, in a statement.

‘The events of 2022 provided further challenges that some leaders translated into opportunities to accelerate their planned business transformation programs.’

Private equity’s role

Ciesco says a ‘clear constant’ over recent years has been the role of private equity in M&A activity.

In 2022, buy-out firms accounted for 42 percent of deals in the four sectors covered by the report, a small decrease from the 45 percent recorded in 2021. Back in 2017, private equity was responsible for just 13 percent of transactions.

‘With an upward trend in funds raised, private equity buyers are likely to remain active, with an estimated industry $2 tn in unspent dry-powder funding sitting in the wings, despite existential challenges at the macro level,’ says Sahota.

Across all sectors, worldwide M&A activity in 2022 declined year on year by 37 percent in deal value and 17 percent in deal volume, according to data from Refinitiv.