CHARLOTTE – The tech industry saw a boost in optimism during Q3, with publicly available deal value almost doubling from the previous quarter, a new report from Charlotte-based DecisionPoint finds.
The total was $98B for Q3 compared to $56B in Q2 2023.
While this total is lower than the pandemic boom, deal activity is still humming, with the third-highest deal count since the beginning of 2020. 1,410 deals were completed in the quarter, with only Q2 2023 and Q1 2022 having more deals.
September was the highest M&A spending of the year, with a total of $41B spent on transactions, but 2023 is still on track to be the lowest total deal value since 2015. Conversely, the deal count is on track to slightly surpass 2022’s record numbers, with 5,600 deals projected for the year.
Several factors contribute to the lower value despite the elevated deal count, such as increased activity from PE-backed companies looking for consolidation in sectors and lack of strategic competition in deal processes.
The M&A market may see more slowing as financial buyers deal with higher interest rates and public strategic acquirers have seen their stock drop from July highs.
In addition, many VC-backed firms are looking into M&A earlier in their lifecycles as firms are unwilling to fund cash burn, which will hurt the company’s valuation if it cannot scale revenue and cut costs before an acquisition.
While these trends may point to a slower end of the year, the boom in demand for AI and ML should help maintain deal activity.