NEW YORK and SAN FRANCISCO, Jan. 25, 2021 /PRNewswire/ -- Union Square Advisors, a boutique technology-focused investment bank, today announced the release of its 2021 Outlook Report: A Time of Transition.
Union Square Advisors forecasts that 2021 will be a strong and successful year for technology deal making, given the sector's proven resiliency and adaptability through the economic and social disruptions of 2020. The firm is optimistic that stable interest rates, bipartisan support for new rounds of stimulus, and the roll-out of COVID-19 vaccines will fuel an economic resurgence of a magnitude not seen since the end of World War II and will further strengthen the outlook for deal activity.
In addition to the firm's broad industry outlook, the report addresses the following trends within technology, capital markets and financing:
Technology M&A: The Comeback That Will Continue: Building on the momentum tech M&A had in late 2020, which saw a 29% increase in dollar volume year-over-year compared to 2019, Union Square Advisors believes the industry will continue to see strong activity in 2021. Barring significant geopolitical or macroeconomic setbacks, the global rollout of COVID-19 vaccines coupled with additional economic stimulus and infrastructure spending will set the stage for economic recovery – as well as accelerate M&A and financing activity, particularly in tech.
The Digital Transformation Wave Continues to Disrupt: Traditionally "sleepy" middle and back office functions have been slower to embrace digital transformation, but, because of the pandemic, that is now no longer the case. Union Square Advisors believes that areas such as accounting, payments, source-to-pay and risk management will continue to be red-hot segments within broader enterprise software as evidenced by valuation multiples of publicly traded entities and acquisitions.
Accelerating the Adoption of Intelligence Engagement: Demographic shifts and new work-from-home routines will continue to alter how enterprises interact with their customers and employees in 2021 and beyond. Union Square Advisors forecasts that integrating intelligent software capabilities that help improve how businesses connect with these key stakeholders, or the adoption of the "platformization" of the entire customer experience, will be critical to maintaining a competitive edge for years to come.
AdTech: An Evolving Ecosystem: The pandemic brought to light how fluid consumers' days can be – wandering between platforms, programs and devices, all from home – and Union Square Advisors believes this shift in behavior will reverberate through 2021. The firm forecasts that advertisers and agencies will continue to use cutting edge AI-tools to provide more relevant advertising content – not only in display, but also in native and video formats.
Embracing Cloud-Native Architecture: DevOps is now synonymous with agile software development, and the focus is now shifting to incorporating security even earlier in the development process. As security is more deeply integrated into the "Dev" part of DevOps, Union Square Advisors sees AI technologies becoming critical to the smooth functioning of "Ops." The capabilities of AI will be essential to managing what would otherwise be overwhelming amounts of logged data.
Recurring Revenue Lending: Underwriting to Growth: Union Square Advisors believes that recurring revenue lending will continue to be an attractive facet of the debt markets in 2021, as lenders continue to show a greater appreciation for reliable, scalable, on-demand SaaS business models. Private equity firms continue to see the allure of SaaS platforms, highlighting that the attractiveness of investing in these businesses is not price, but the market for growth – making money through operational excellence vs. applying leverage is the play today.
Pandemic Revelations for Capital Providers: 2020 led investors to have many "pandemic revelations," such as the need to re-evaluate portfolio strategy as well as the quality of management and capital structure, all of which Union Square Advisors believes will influence M&A activity for capital providers this year and beyond.
"During the onset of the pandemic, most technology companies and their capital providers took swift action to prepare for the worst, which ultimately paid off," said Carter McClelland, Chairman and Co-Founder, Union Square Advisors. "While we recognize that other parts of the economy have not been as fortunate, we are confident that technology will provide the tools to guide all of us through this transition period and eventually to a robust economic recovery."
Ted Smith, President and Co-Founder reinforced, saying, "The technology sector stands to gain meaningfully from the forces that will rebuild the global economy. It has never been more important for technology companies to understand and utilize the breadth of capital and strategic tools available to them. Here at Union Square Advisors, we are looking forward to a very active and positive 2021 – and with an even greater sense of purpose and enthusiasm for our existing and prospective clients."
About Union Square Advisors Union Square Advisors is a leading technology-focused investment bank that supports clients in pursuing and executing their most important strategic transactions. Our team includes former heads of the world's largest technology investment banking practices, plus senior professionals with deep experience providing superior advice to boards of directors and management teams in multiple arenas. We specialize in strategic relationships and corporate development, mergers & acquisitions, buyouts, restructurings, special situations, public and private capital raises, capital structure optimization, liability management and other capital markets transactions. With extremely deep sector knowledge and strong relationships throughout the tech ecosystem, our business centers on advising the leading companies and pools of capital across the enterprise technology universe. Since our founding in 2007, we have advised on 125 transactions, with total transaction value in excess of $105 billion. For more information, please visit www.usadvisors.com.
Media Contacts: Emily Roy Prosek for Union Square Advisors O: 646-818-9232 [email protected]
Jennifer Hallahan Director, Communications & Marketing, Union Square Advisors O: 212.376.1770 M: 917.912.2006 [email protected]