by Anand Kalra, Principal, Zinnov; Shrey Sood, Engagement Manager, Zinnov; Prakash Jain, Project Lead, Zinnov
Following a record-breaking year for Mergers & Acquisitions (M&A), 2022 has had a relatively slow start. While the momentum in deal activity continued in January and February, the sky rocketing inflation and the Russia-Ukraine war have had a negative impact on the M&A market in March 2022. Also, the market trajectory through the quarter was negative, with month-on-month declines from January through to March.
Q1-2022 was the 7th consecutive quarter with over USD 1 Tn deal activity across sectors. While SPAC activity levels were down by ~87% vs Q1-2021, Private Equity buyouts were up by 18% to reach a record USD 291 Bn, which is the strongest YTD activity for PE buyouts ever.
The technology sector continued to dominate the M&A market contributing ~26% to the global M&A value in Q1-2022, which was up from the ~20% contribution seen in Q1-2021. While the year started well for the technology sector, increased geopolitical tensions and the possibility of multiple rate hikes led to subdued M&A activity in the months of February and March. While public market valuations saw a mild correction in Q1-2022, they still remain at historically high levels.
While the deal activity was impacted in March, fundamental drivers of dealmaking remain robust. The technology sector continues to be a strong favorite for PE firms, while strategics continue to acquire the right assets to address portfolio gaps.
In this quarterly update, Zinnov’s M&A Advisory team explores key data points and M&A trends across the Technology & Services industry.
The report sheds light on:
• M&A activity and trends; marquee software and services transactions in Q1-2022
• Valuation trends in the technology services space since 2019
• Key M&A themes and drivers
• Near-term risks including increasing interest rates and geopolitical uncertainties
• Impact of Russia-Ukraine war on the M&A market
• Zinnov Insights on Private Equity and M&A; Technology Trends
• IT Services Transaction Activity
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