Last year’s record volume of technology M&A activity has been fuelled by a tidal wave of private equity (PE) money. Given the large amount of global PE investment capital waiting to be deployed, tech-focused investment bank ICON Corporate Finance predicts this trend will continue and says that it is an opportune time to consider a PE deal.
Last year’s record volume of technology M&A activity has been fuelled by a tidal wave of private equity (PE) money. Given the large amount of global PE investment capital waiting to be deployed, tech-focused investment bank ICON Corporate Finance predicts this trend will continue and says that it is an opportune time to consider a PE deal.
Yet, to many technology entrepreneurs, private equity remains a poorly understood concept when it comes to capital options. In its recent insights report, ICON aims to clarify understanding, bust some of the myths around private equity, and shed light on what it takes to secure a successful private equity transaction.
Last year, over one third of all technology exits in Europe was private equity funded – an increase of 38 per cent on 2020, and almost three times as much as in 2015. Recent examples in Europe include TA Associates.
USD2 billion-plus acquisition of the Dutch enterprise software firm Unit4 NV, as well as the majority buy-out of Irish Fintech unicorn Fenergo by PE funds Bridgepoint and Astorg.
Predicting further investment growth in the sector, ICON cautions that businesses looking for funds need to get investment fit first to compete for premium deal outcomes.
Its new ‘Tech Private Equity Demystified’ report, not only outlines common principles that businesses looking to exit need to be aware of, but also provides advice to maximise the probability of success in a PE transaction and forms the basis for strong future performance.
Amongst its findings, the report reveals that the number of private equity led technology deals has almost tripled since 2015, with over one third of all technology company sales now being snapped up by PE investors rather than corporate acquirers – the fastest pace since the financial crisis.
Growth capital and buy-out firms have also never faced more competition as significant numbers of funds actively seek tech opportunities in Europe, creating a sellers’ market for high-quality businesses.
The report says top of an acquirer’s list will be a high-quality management team with a cash-generative and recurring revenue business models.
