CHARLOTTE – Mergers and acquisitions are suffering from the current economic uncertainty, reports Charlotte-based DecisionPoint.
That’s bad news for startups and emerging entrepreneurial companies looking for an M&A as a possible exit.
“As the economy recovers from COVID, uncertainty has pushed tech M&A back to its lowest level since the initial outbreak,” the firm reports.
“The megadeals have begun to slow; through Q3 in 2021, there were 129 deals worth over $1B+, and only 69 through Q3 this year. While the larger deals have fallen off, quality private companies can still find good deals in the market, with the total deal count in the quarter only falling by 135 while considering the worsening economic outlook. With valuations falling and the cost of capital rising, some sellers are holding out for better economic conditions, and financial buyers are more skeptical about high valuations.”
DecisionPoint offers M&A advisory services for middle-market technology companies, and their venture capital investors, in the software, services, telecommunications and healthcare IT sectors, according to its website.
“Private equity firms are still expected to play an active role in the M&A market, with many carrying large balances of cash that need to be put to work in this inflationary environment,” the company says. “While these firms need to put their money to work before the end of fund life, expect the PE investors to conduct more thorough diligence and negotiate for high indemnity holdbacks.”
Read the full report at: https://www.decisionpointint.com/_files/ugd/1f73bf_b0d331b1e51f4ba8bad3155d6e61f348.pdf
