2018 was a record year for M&A and financing activity in the technology space, with strong corporate earnings growth and balance sheets, along with abundant available capital in private equity, growth equity and venture funds driving the momentum. This year's outlook forecasts active M&A and financing markets and uncovers the following trends:
- Broad Mega Trends to Watch in 2019: Nonstop innovations, disruption and consolidation define the technology industry as a whole, but abundant capital, evolving data ecosystems and heightened security will drive the next chapter of growth in technology M&A.
- Playing Offense: Can 2019 Be as Active as 2018?: While 2018 saw record levels of M&A activity, it also experienced severe market swings. This heightened level of uncertainty will impact M&A activity in 2019, though the extent of which is unknown. What is certain, is that big technology companies will continue to permeate across several sub-verticals to enhance their capabilities, making themselves more competitive.
- The Launch of 5G: Deep Pockets and New Frontiers: The launch of 5G wireless networks will certainly set the stage for the Internet of Things (IoT) to become a hotbed for investment and consolidation. In 2019, the volume and focus of M&A activity in the space will center on companies with deep intellectual property that offer leading infrastructure and consumer services.
- Managing Complexity Across Hybrid IT Models: As enterprise technology, infrastructure and services evolve and with data management and security issues on the rise, CIOs will be required to think big this year with tools like RPA to best manage the increasingly hybrid IT world.
- Enterprise Data: Volume, Velocity and Value: Next-generation data and analytics-driven solutions are at the leading edge of software innovation and investment, and where expected continued meaningful M&A and financing transactions will occur in 2019.
- Structural Solutions to Investing in Volatile Markets: For VC, PE and growth investors, expected ample liquidity will sustain the steady flow of deals in 2019. Prices should remain high enough to encourage sellers, yet still low enough to promise a reasonable return.
"2018's activity outpaced our most optimistic forecasts," said Carter McClelland, Chairman and Co-Founder, Union Square Advisors. "As our second annual report highlights, while we recognize the real possibility of a sustained correction to bring valuations more in line with historical norms, we expect 2019 will be both an active M&A and financing market."
Ted Smith, President, Co-Founder and Head of Software echoed McClelland's sentiment, saying, "Despite high valuations and recent volatility in equity markets, we expect to see continued M&A, IPO and financing activity particularly in verticals such as software, IT infrastructure and internet, digital media and marketing technology in 2019."
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About Union Square Advisors
Union Square Advisors LLC is a leading technology-focused investment bank that offers strategic mergers & acquisitions advice and execution, as well as agented private capital financing services. Founded in 2007, with offices in San Francisco and New York, Union Square Advisors works with leading public and private technology companies, venture capital and private equity firms across the technology landscape with a primary focus on Software, Software-Enabled Services, IT Infrastructure and Internet/Digital Media/Marketing Technology. Since inception, Union Square Advisors has advised on over 100 transactions, valued in excess of $95 billion. For more information, please visit www.usadvisors.com.
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SOURCE Union Square Advisors