MoFo Survey: Tech M&A Revival Buoyed by Market Rally, Lower Financing Costs, and Private Equity Deal Making

Morrison Foerster, a leading global law firm, today announced the results of its annual Tech M&A Survey conducted in conjunction with Mergermarket, which reveals that momentum for tech dealmaking is gathering steam amid market optimism and demand for transformative technologies across all sectors. This is reflected in aggregate reported deal value, which surged by 39% reaching $482 billion so far in 2024. The new Morrison Foerster and Mergermarket survey report, “Powering Up: Sentiment, Stocks, and Security Drive the Tech Deal Revival” shows that 54% of respondents are expecting deal volumes to increase over the next 12 months, up from 48% in last year’s survey.

“We’re seeing a renewed appetite for big-ticket tech M&A, driven by improved buyer sentiment and a rally in key tech stocks,” said Brandon Parris, partner and co-chair of Morrison Foerster’s global M&A practice. “The tech M&A market is reawakening, marked by a trend toward fewer but heftier transactions. This energy is a decisive shift from last year’s retreat, laying the foundations for a recovery in 2025.”

“Dealmakers are evaluating more considerations in this shifting market with deal structures that offer flexibility, shared risk, and performance guarantees,” added Jeremy White, partner and co-chair of Morrison Foerster’s global M&A practice. “However, tech M&A continues to be a priority as investor interest in larger, domestic acquisitions of high growth companies are seen as the key for unlocking the promise of transformative technologies like generative AI.”

Key Findings

• More Tech M&A Deals Expected Ahead: The technology sector witnessed a resurgence in M&A activity during the first nine months of 2024. Volume remained steady at 6,500 deals, while aggregate deal value surged by 39%, reaching $482 billion. This aligns with sentiment among survey participants, with fifty-four percent of respondents expecting deal volumes to increase over the next 12 months, up from 48% in our previous survey.
• Private Equity Leads Revival: Private equity firms are especially bullish with 57% anticipating tech deals compared to 51% of corporates. Global private equity-backed deals worth $5 billion and above jumped in 2024 and totaled $123.64 billion as of July, already exceeding the $75.2 billion for full year 2023.
• Tech’s AI Transformation Just Beginning: Survey respondents indicated that companies in business services (59%), technology (55%), and retail (42%) are leading in AI integration and utilization by quickly adopting AI for central tasks. Pharmaceuticals, medical and biotech (51%), and energy, mining, and utilities (49%) were identified as the sectors with the most potential for new or improved AI.
• Alternative Deal Structures Maintain Appeal: Investors are looking to mitigate financial, regulatory, or market risks through minority investments, earnouts, and other alternatives like joint ventures and contingent consideration. Eighty percent of PE firms surveyed will be exploring minority investments in their tech M&A plans over the next 12 months. Seventy-eight percent of corporate buyers will use earnouts or contingent considerations in future tech M&A transactions.
• Rise of Shareholder Activism: The focus on technology’s tremendous disruptive potential and high valuations has led to an increase in shareholder activism globally. Fifty-one percent of respondents indicated that shareholder activism in connection with tech M&A is likely to increase over the next three years. Dealmakers now need to carefully assess and prepare for potential activist investors when initiating M&A activity. The introduction of the universal proxy card in the United States has led to the proliferation of first-time occasional activists.
• ESG Standards Here to Stay: Dealmakers continue to focus on ESG considerations during risk assessments for acquisition targets and rated it 8.1 out of 10 this year. The responses increased to 8.7 out of 10 in ESG importance for future due diligence. New ESG disclosure requirements from various jurisdictions should provide standardized reporting for future M&A due diligence.

To download the full survey results with additional insights, visit: What’s The Forecast for Tech M&A?.

Methodology

In Q2 2024, Mergermarket surveyed 300 dealmakers from around the world to gain insights into the future of technology‑related M&A. Respondents were equally distributed among corporates with a minimum of $250 million in annual revenue and private equity (PE) firms with a minimum of $500 million in assets under management. In respect of geography, 30% of respondents were based in North America, 30% in Europe, 30% in Asia-Pacific, and 10% in Latin America. All responses are anonymous, and the results are presented in aggregate.