Technology Mid-Market M&A Update

September 2019

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From 2008 to 2018, global GDP grew at an average annual rate of 3.4%, despite sustained geopolitical, regulatory and economic uncertainty around the world. At the end of that period, however, there were signs that the chaotic environment was finally taking a toll on the global economy. In the second half of 2018, volatility in financial markets, combined with trade tensions and other factors, destabilized the U.S. stock market and led the IMF to downgrade its estimate of global economic growth for 2019.

Worldwide M&A activity caught the cold, dropping by 25% from Q4 2018 to Q1 2019, according to Mergermarket. While global stocks recovered quickly from the December downturn, mid-market M&A remains in a slump, with volumes dropping 2% from the first quarter to the second. All told, H1 2019 volume was down 23% from the same period last year.

Tech M&A fared slightly better, with volume falling only 20% from Q4 2018 to Q1 2019 and actually increasing by 3.6% from Q1 to Q2. Tech M&A volume dropped by 18% in H1 2019 versus H1 2018. This resilience, combined with continued interest in the tech sector from strategic and financial buyers alike and the proven value of M&A as a vehicle for growth, could bode well for a rally in the second half of this year.

In this inaugural BDO Technology Mid-Market M&A Update, BDO looks at the key factors that led to the H1 2019 drop in tech mid-market M&A activity and new threats and opportunities that technology leaders should consider as we approach Q4 2019 in this period of sustained uncertainty.