Top Six Private Equity Trends Impacting Tech Companies
Ryan & Wetmore has been a member of the BDO Alliance for the last 14 years. The article below delves into a survey conducted by the BDO alliance, shedding light on critical insights and trends within the tech industry, specifically for private equity. Read the article below to view their full findings, and contact Ryan & Wetmore today for more information.
The second half of 2022 and the beginning of 2023 presented a thorny challenge for the tech industry as adverse market conditions slowed growth to a crawl, forcing tech companies to revisit their business models. At the same time, deal activity dropped due to declining valuations and financial uncertainty. What followed were months of cost reductions and layoffs as the tech industry struggled to kickstart growth and profitability.
Fortunately, we seem to have turned a page. Now, over halfway through 2023, we are seeing inflation cool and M&A activity pick back up. Some uncertainty remains — for example, the possibility of additional interest rate hikes — but overall, conditions are improving for the tech industry.
To make the most of changing market conditions, tech companies need to revisit their deal and exit plans. The first step for tech leaders is to understand the current tech private equity (PE) market to get a sense of their opportunities and challenges.
In March 2023, BDO conducted a survey of 405 U.S. private equity fund managers and operating partners, 114 of whom invest in technology (among other industries). We analyzed the data from this subgroup to identify the top six tech PE trends that tech leaders need to know:
What Comes Next?
As market conditions improve, competition for deals will be fierce. Here are steps tech leaders should consider taking to help improve their chances of landing the right deal or investment:
As tech leaders explore deal opportunities and exit options in 2023, closely following and understanding PE trends can help them ensure they’re making the right moves at the right times.
Written by Hank Galligan and Jim Clayton. Copyright © 2023 BDO USA, P.C. All rights reserved. www.bdo.com