Despite the uncertainties introduced by the recent U.S. election, tech companies are increasingly considering the M&A arena in light of alleviating inflation and advancements in AI, according to KPMG experts. The average contract size has experienced substantial growth this year, while the volume has grown modestly. These trends are anticipated to persist until 2025. Nevertheless, private equity investors are presently under increased pressure to identify buyers or vendors, as their portfolios contain approximately 450 technology companies with a value of $1 billion or more. This pressure is further exacerbated by a less robust M&A recovery than had been anticipated. Global M&A activity in H1 increased to $1 trillion, which remains below the 10-year average of $1.5 trillion.
Deal-makers are optimistic about potential double-digit increases in M&A volume next year, driven by pent-up demand, interest rate cuts, and expected deregulation from the incoming Trump administration. However, uncertainty about future policies, particularly regarding deportations and their impact on inflation and interest rates, remains a concern. KPMG experts emphasize the importance of strategic planning, operational efficiencies, and maintaining low debt and high cash reserves. Finance leaders in the tech sector are shifting focus from pure growth to fundamentals, navigating the current environment by prioritizing basic strategies and aligning key performance indicators.
