Now that the US election is decided, M&A activity is expected to accelerate—and technology is leading the pack. The sector led a deal recovery in Q3 as interest rates eased and tech stocks rallied.
The total quarterly value of global tech M&A deals rose to $220.6 billion, marking a roughly 60% jump from Q3 last year, according to PitchBook’s Q3 2024 Global M&A Report.
This boosted the three-quarter total—including deals reported late and those with undisclosed values—to an estimated $613.4 billion, a nearly 62% surge from the same period in 2023.
The growth in tech M&A deal volume outpaced the recovery seen in other major sectors, encompassing business services, consumer services, healthcare, energy and financial services.
Both PE sponsors and corporate acquirers have been active in the tech space, said James Beach, a partner at law firm Morrison Foerster.
On one hand, the Federal Reserve’s interest rate cut in September and an uplifting prospect of further cuts encouraged more dealmaking, he said.
On the other, recent rallies in public tech valuations have drawn PE sponsors back to the negotiation table as they gain confidence in exit opportunities for private tech companies.
Strong tech valuations may also encourage deal activity by listed corporate acquirers as they can afford higher multiples for potential targets when financing those transactions with stock, Beach added.
PE snaps up largest tech deals
PE’s renewed appetite for large tech acquisitions fueled in part the strong comeback for tech M&A.
The report shows that, in Q3, PE firms inked six of the 10 largest tech acquisitions. These mega-deals included the $8.4 billion take-private of work management company Smartsheet by Blackstone and Vista Equity Partners, and the $5.3 billion acquisition of cybersecurity company Darktrace by Thoma Bravo.
This contrasts with Q1, in which corporate-backed M&A held all 10 spots.
The recent spate of multibillion-dollar buyouts signals the return of bigger PE players and injects a shot of confidence into the market, Beach said.
PE dealmakers appeared to be slightly more bullish on the M&A market’s recovery than strategic buyers, based on findings from a Mergermarket survey in Q2.
Fifty-seven percent of surveyed PE firms expected increased deal volume in the following 12 months, while only 51% of corporate respondents shared the same view.
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