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Technology’s Resilience and Cash Reserves Could Boost M&A Activity

Tech valuations have not suffered as much as other sectors, but their declines still present opportunities to acquire.

スナップチャート

Technology’s Resilience and Cash Reserves Could Boost M&A Activity
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The technology sector as a whole appears less distressed than other industries and has significantly outperformed the S&P 1500 so far in 2020. Nevertheless, some tech companies have seen their valuations decline since the Covid-19 pandemic began. This presents opportunities for others to acquire new capabilities that may have been prohibitively expensive before these valuations shrank. While technology deals in the first quarter fell 43% from the previous year, tech leaders are sitting on large cash reserves that make acquisitions likely. Many technology companies will use this opportunity to reposition their organizations for the new normal after the pandemic ends, one that focuses more on digital engagement and virtual collaboration. Tech leaders should also capitalize on the accelerated transition to cloud and various “as-a-service” offerings, as well as data analytics, artificial intelligence and automation.

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