M&A in Technology in Australia Increased in Q2 2023
Australia’s TMT (Technology, Media, and Telecommunications) sector is experiencing a recalibration following the accelerated movements of 2021 and 2022. As M&A in the sector tries to rebalance, it is continually impacted by rising inflation, high-interest rates, low valuations, and limited access to capital markets. The collapse of several US-based financial institutions is not doing the sector any favours either. But despite these challenges, technology in Australia has found a new normal following the rapid digitization of the pandemic. Experts even predict more robust deal making activities in the next half of 2023. Here is a closer look at M&A’s performance in the sector thus far.
M&A in the First Half of 2023
M&A rebounded significantly in the tech sector in the first half of 2023. According to the Deals Database by GlobalData, the industry saw 34 deals in the second quarter this year, totaling $208.9 million in value. Compared to the previous quarter ($41.7 million), this marked a 401 percent increase. The largest deal from this period was Thales Australia Holdings’ acquisition of Tesserent for $132.4 million.
Is the Technology Sector Growing?
The technology sector in the country has evolved over the last three years due to increased digitization. Digital adoption spiked monumentally during the pandemic across every business, sector, and market. Due to the movement restrictions imposed during this period, product and service providers found the need to change how they interacted with customers.
This move saw the growth of many sectors, including e-commerce and gaming. Just as people could purchase products online, they could also play and be entertained on platforms like Topaustraliangambling.com, bank on their phones, learn, and more.
The accelerated and widespread digitization also made technology one of the most critical infrastructures of the next decades. Experts, entrepreneurs, investors, and consumers now have a clearer idea of emerging technologies, how they will affect the economy, and which players will have more say in the next several years.
The implication is that high-quality assets are set to remain contested and in high demand, especially if they have diverse applications, strong market positions, and clear profitability.
Contributing Factors
Going into 2023, many analysts predicted that deal making activity would remain low as it had in late 2022, particularly in TMT. The thinking was that the market was flooded with negative sentiment following the collapse of several notable US-based banking institutions.
However, as the data shows, M&A activity rebounded this quarter. Analysts now expect it to accelerate even further throughout the rest of the year. But what exactly is driving this growth?
Experts cite strong and growing interest among investors and buyers in deep technology. This is especially true for promising innovations and applications like IT software and services, health, defence, and AI. In iGaming, VR technology draws more investments in preparation for the Metaverse.
Experts also believe that the performance of the US dollar is to thank for the growth of Australian tech markets. As the dollar’s value rises against the Australian dollar, it allows US dollar-based funds and companies to acquire Australian firms for much less, encouraging M&A.
Wrapping Up: Brighter Days for Tech M&A?
The recent and sudden collapse of SVB was as unpredictable as things can get in the economic landscape. Nonetheless, experts maintain that Australia can rebound from such incidents. The current conditions – rising interest rates and inflation – present some challenges. But despite this, the M&A landscape seems primed for more progression for the rest of 2023.
