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    Tech, Media & Telecom Q1 2023

    Q1-2023-Tech-Media-Telecom

    Industry Trends

    Tech M&A Set to Rebound in 2023

    Acquisition activity in the tech industry is expected to rebound in 2023 after a slowdown in 2022, according to a report by S&P Global Market Intelligence. The report states that strategic acquisitions will continue to be a key driver of tech M&A activity, with an emphasis on acquiring emerging technologies and expertise in areas such as cybersecurity and cloud computing. Additionally, private equity firms are expected to remain active in the tech M&A market in 2023.1

    Tech Layoffs Continue

    Tech layoffs continue to be on the rise as companies face increasing pressure to cut costs and streamline operations. According to data by Layoffs.fyi, the tech industry has laid off over 120,000 employees in Q1 2023, roughly 25,000 short of total tech layoffs in 2022. While the tech industry continues to grow overall, some sectors are experiencing a slowdown, such as hardware and semiconductors, which may be contributing to the trend of tech layoffs.2

    Big Tech Turning to AI for Cloud Services

    Big tech companies are increasingly focused on generative AI to enhance their cloud services with rapid improvements in content creation, such as videos, images, and text, based on training data. Interest in generative AI has exploded since the chatbot Chat GPT was unveiled in November by OpenAI, a startup Microsoft has invested in heavily. To capitalize on the growing interest, Google is now highlighting the potential of new generative AI in its sales pitches.3

    U.S. Threatens Ban on TikTok Over National Security Concerns

    The U.S. government has threatened to ban TikTok, a popular social media app, unless its Chinese owner, ByteDance, sells its ownership stake in the company. The move is seen as a way to address concerns over national security and data privacy, as TikTok has faced accusations of sharing user data with the Chinese government. The proposed sale could face legal and logistical challenges and have a significantly negative effect on TikTok's user base and advertising revenue.4

    Largest Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • Coupa Software Incorporated
    • Abu Dhabi Investment Authority; Thoma Bravo, L.P.
    • $9,053.72
    • KnowBe4, Inc.
    • Vista Equity Partners Management, LLC
    • $3,451.22
    • Duck Creek Technologies, Inc.
    • Vista Equity Partners Management, LLC
    • $2,632.82
    • Safety Business of Intrado Corporation
    • Stonepeak Partners LP
    • $2,400.00
    • Link 16 Tactical Data Links Business of Viasat
    • L3Harris Technologies, Inc.
    • $1,960.00
    • ServiceMax, Inc.
    • PTC Inc.
    • $1,485.00

    Other Financial Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • UserTesting, Inc.
    • Thoma Bravo, L.P.; Sunstone Partners Management, LLC
    • $1,280.97
    • Talent Neuron
    • Leeds Equity Advisors, Inc.
    • $164.00
    • PolySign, Inc.
    • tokentus investment AG
    • $0.05

    Other Strategic Buyer Transactions Closed

    • Target
    • Buyer
    • Value($mm)
    • WillowTree, a TELUS International Company
    • Telus International Holding (U.S.A.) Corp.
    • $1,225.00
    • SMS ASSIST, L.L.C.
    • Lessen Inc.
    • $950.00
    • Benefitfocus, Inc.
    • Voya Financial, Inc.
    • $570.00
    • SurePrep, LLC
    • Thomson Reuters Corporation
    • $500.00
    • Blume Global, Inc.
    • DS Admiral Bidco, LLC
    • $414.00

     

    Source S&P Capital IQ as of 4/14/2023 and PCE Proprietary Data

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    Data Assumptions

    This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.

    Glossary

    EBIT - Earnings Before Interest and Taxes
    EBITDA - Earnings Before Interest, Taxes, Depreciation, Amortization
    LTM - Last Twelve Months
    TEV - Total Enterprise Value

    Sources:

    1. “Tech M&A Outlook: Back on track in 2023?” S&P Global Market Intelligence, 1 February 2023.
    2. Mascarenhas, Natasha & Stringer, Alyssa. “A comprehensive list of 2023 tech layoffs.” Techcrunch, 27 March 2023.
    3. Dotan, Tom & Kruppa, Miles. “Microsoft, Google, Amazon Look to Generative AI to Lift Cloud Businesses.” The Wall Street Journal, 27 March 2023.
    4. McKinnon, John. “U.S. Threatens Ban if TikTok’s Chinese Owners Don’t Sell Stakes.” The Wall Street Journal, 15 March 2023.

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