Technology companies with research and development (R&D) prowess remain an abundant source of mandates in Germany, Austria and Switzerland (DACH), with US investors driving much of the subsequent deal activity.

This gives advisors who can offer clients access to a US investor base a leg up on the competition when looking to land sellside mandates in the tech space, said Andreas Kinsky, partner at Pava in Munich.

Within tech, niches such as artificial intelligence (AI) and machine learning are poised to see high levels of dealflow this year, as are fields such as renewables and sustainability-related technologies, Kinsky said. Semiconductors – a key area for AI – are also in focus, he said.

US investors see Europe as an area where they can still buy tech businesses for a reasonable price, Kinsky said. “Germany has an especially high degree of knowledge and R&D in spaces like semiconductors, but firms looking to raise large sums of capital often need to turn to the US market as this is not always feasible at home,” he said.

In 2023, tech was one of the region’s top two sectors in terms of M&A fees, alongside industrials, according to Dealogic revenue data**. Dealmakers expect this trend to continue.

“I think 2024 will be a heavy year for technology, and it will be busy,” Harald Mährle, founder and Managing Partner at TCG Corporate Finance in Munich, said. “A lot of things will come to market, particularly in the services and software space, because those are the sectors where multiples are still really healthy.”

Ongoing tech deals include the auction of Carlyle-backed [NASDAQ:CG] SER Group, a German enterprise software provider, while mindcurv, a German cloud and managed information technology (IT) services, was recently acquired by Accenture [NYSE:ACN] from owner GENUI.

In general terms, DACH M&A fees were down only 8% to EUR 1.6bn in 2023, from an all-time high of EUR 1.8bn in 2022, according to Dealogic data. Elsewhere across Europe, M&A fees slumped at a much greater rate of 26% in the same period.

Germany, the only DACH country to consistently generate the bulk of M&A fees, was down about 13% from 2022; while Austria fell 31%. Switzerland, meanwhile, was one of the few European countries that saw a rise in M&A fees, as comparatively lower interest rates and inflation contributed to a high level of strategic repositioning.