NEW YORK—New data suggests that the slumping stock prices of many tech companies in 2022 also put a crimp on deal making, with global mergers and acquisition in the tech industry declining to $584 billion, according to a new S&P report.
The lower total may also suggest a “new normal” of fewer tech deals and M&A in the future, S&P said.
While the 2022 total was the fourth highest in the tech sector’s history, it was still notably down by 25.7% from the record $786 billion M&A activity seen in 2021 globally.
The number of transactions, however, were higher at 4,970 in 2022, versus 4,360 in 2021.
The S&P analysis called the M&A figures a sign of a “new normal” for tech deal making, noting that “after years of standing out, tech looked a bit ordinary in 2022. No longer able to soar above other industries on an up-and-to-the-right trajectory for both growth and valuations, tech companies reworked their business plans last year to account for the uncharacteristic weakness across the sector. One of the first items to get scratched: M&A.”
The report also noted that deal making slowed significantly in the second half of 2022.
Spending on acquisitions in the second half of 2022 plummeted 60% compared with the first half.
Buyers announced only slightly more than half as many transactions valued at more than $1 billion in 2022 vs. 2021, an indication of renewed sensitivity to risk and uncertainty at the top end of the market, S&P also reported.
“All of those factors combined to knock spending on acquisitions last year basically back to where it has been, on average, since the middle of the past decade,” the analysis said. “Coming out of 2022, the `new normal' for tech M&A looks a lot more normal than it did at any point since mid-2020.”
