This report, published in association with Morrison Foerster, features a survey of 300 tech dealmakers from around the globe to gain their insights into what precisely is driving tech M&A strategies in the near and medium term.

Key findings include:

• Tech M&A Bounce Back. The technology sector witnessed a resurgence in M&A activity during the first nine months of 2024. Volume remained steady at 6,500 deals, while aggregate deal value surged by an impressive 39%, reaching $482 billion.
• A Brighter Outlook. Investor sentiment is warming towards tech M&A, with 54% of respondents expecting deal volumes to increase over the next 12 months, up from 48% in our previous survey. This optimism is being fueled by the potential easing of interest rates, the promise of AI, and the ongoing digital transformation across industries.
• PE Returns to the Table. Private equity firms are displaying a particularly bullish outlook, with 57% anticipating an uplift in tech deals compared to 51% of corporates.
• The “Goldilocks” Zone. A clear preference for young growth companies is emerging, with 43% of respondents favoring these targets over start-ups (29%) or mature companies (28%). This strategy seeks to balance the potential for high growth with profitability, identifying companies that have proven their business model and product market fit, but still offer significant opportunity to scale.
• Cybersecurity and AI. For the second consecutive year, cybersecurity tops the list of sub-sectors presenting the best opportunities for dealmaking, albeit by a relatively slim margin. Just over half of respondents (53%) have their eyes on the segment, which is harnessing generative AI through advanced threat detection and response capabilities. Meanwhile, 47% of respondents believe that AI/machine learning targets offer the greatest deal opportunities right now.
• Barriers to Adoption. While AI is widely recognized as a transformative force, its adoption faces hurdles. We find that 45% of respondents cite increasingly strict regulation as a primary obstacle, while 41% point to the absence of shared protocols.
• Mind the Valuation Gap. Wide valuation gaps emerge as the greatest challenge to tech M&A in the opinion of both North American (41%) and European (43%) buyers.
• Sustainable Practices Gain Ground. In spite of political pushback in the U.S., environmental, social, and governance (ESG) considerations continue to gain prominence. Currently scoring 8.1 out of 10 in importance for recent tech deals, according to our survey, ESG factors are expected to reach 8.7 for future transactions.

The report is also available at mofo.com/tech-ma-forecast