Tech M&A thrived in 2021 as deal activity rebounded from the COVID-19-induced slowdown in 2020 and broke previous records. The unprecedented depth, breadth, and velocity of the deal market led deals across all sectors, sizes, transaction types, and geographies to have healthy showings. Major equity indexes, including the FTSE 100 and the S&P 500, powered higher through much of the year. This reflected higher confidence levels and surging fundamentals. Earnings and profits rose, while multiples remained aloft. This helped c-suites and board rooms feel more comfortable taking on risk and pursuing M&A deals.
Tech ends the year at a frenetic pace. Strong corporate and private equity balance sheets drove the sector’s robust deal activity, and buyers used tech M&A to keep up with the rapid pace of digitization across industries and to differentiate themselves with tech capabilities. In recent months, high-growth tech shares have started to underperform, with markets pricing in multiple interest rate hikes from the Fed in 2022. Any downturn in public tech shares is likely to be a leading indicator of lower IPO and M&A activity and thus bears watching.