Following a surge in M&A activity in 2021 and the first quarter of 2022, deal making in the Tech sector slowed significantly through the remainder of 2022.

A number of factors contributed to the decline in activity during 2022. Central banks across the world increased interest rates in a bid to curb rising inflation. This pushed up the cost of capital for investors and purchasers while raising the spectre of recession and falling earnings. Russia’s invasion of Ukraine added further volatility and uncertainty to the mix.

The deteriorating macro-economic and geo-political conditions prompted a sharp fall in the price of publicly traded technology stocks in Q2 2022, particularly in the US,1 and led to a large gap opening up in valuation expectations between sellers and buyers in the private Tech M&A market over the course of the year. In the second half of 2022 many Tech M&A sale processes took much longer to complete than had been the case in previous years, as buyers conducted more rigorous due diligence, and some sellers decided to postpone divestments and wait for more favourable market conditions.

Many of these issues were not unique to the sector and Tech M&A trends were consistent with a wider decline in M&A activity generally in 2022. It is interesting to note that the tech sector’s overall share of M&A value has increased year-on-year since 2017, reaching 22.2 percent in 2022.2 Software deals alone accounted for approximately 25 percent of all global deal value in H1 2022.3 Despite a reduction in deal volume (when compared to the previous quarter), Q3 2022 marked the tenth consecutive quarter for which the software industry had the highest volume of M&A deals globally.4

North America

Despite the slowdown in overall M&A activity in 2022, US aggregate transaction value for Tech M&A outperformed other markets such as Europe due to a handful of very large deals boosting the valuation figures.5 These included, for example, Microsoft’s $67.8bn proposed acquisition of Activision Blizzard, Broadcom’s $70.4bn proposed acquisition of VMware and Elon Musk’s $44bn acquisition of Twitter. Technology, media and telecoms (TMT) deal volume also remained robust: in Q1–Q3 2022, deals with a target in the TMT sector accounted for 29 percent of all M&A activity announced in the region.6

Whilst deal making has slowed as investors await the outcome of the Federal Reserve’s anti-inflationary monetary policy,7 the strength of the dollar and relative weaknesses of other currencies are expected to lead to a rise in transatlantic M&A, as overseas assets are cheaper for US buyers.8 On the domestic front, however, the fallout from the sharp decline in Tech IPO activity is likely to have an impact on deal making, as the pool of potential buyers for take-privates is reduced.9


Although European Tech M&A activity was down in 2022 compared to 2021, the digital infrastructure industry was one of the most active areas for European M&A during the year. This was due to digital infrastructure being relatively well-insulated from inflation (with the ability to pass through inflationary costs to key customers), and deal making in this area is expected to remain active in 2023 (albeit with investors reconsidering some of the exceptional valuations seen in previous years). In the UK, Tech deals accounted for 28 percent of all M&A activity in Q1–Q3 2022.10 In Europe, TMT M&A activity increased from Q1–Q3 2022.11

It was noticeable that funding conditions for venture and growth equity in Europe became more challenging in 2022. There were significant down rounds for a number of high profile Tech companies, particularly in the FinTech sector. This was not caused by a lack of capital; there is estimated to be approximately $80bn worth of dry powder in Europe.12 Rather, it was the result of investor caution about deploying capital in the face of a worsening economic outlook and the wide gap in valuation expectations between investors and founders. Investor concern about whether macro-economic conditions will improve in the near future is likely to result in reduced capital deployment in 2023. In addition, Tech companies themselves may decide to wait until valuations pick up before seeking new venture capital finance unless they have an urgent need to raise new capital.


In the Asia-Pacific region, TMT was the top sector for deal volume across Q1–Q3 2022, with TMT deals accounting for approximately 17 percent of all M&A activity. The sector was second in the league tables for deal value, behind financial services in H1 2022 and industrials and chemicals in Q3 2022.13 One of the features of the activity in the Asia Pacific region was an increase in acquisitions relating to emerging technologies such as metaverse infrastructure, artificial intelligence and cloud computing.14

In China, Asia-Pacific’s largest M&A market, approximately one third of total deal volume can be attributed to M&A transactions involving Tech companies, and demand there remains strong.15 Looking forward, however, technology investment in China is likely to become more domestic in light of recent geopolitical developments and increased protectionism.16

What next?

Tech M&A activity levels remain subdued at the start of 2023 as buyers and sellers adjust to the new market environment. We expect this adjustment process to play out during the course of the year as parties find a new valuation equilibrium.

Established technology companies (and large corporates from other industries that wish to develop their technology offerings) that have strong balance sheets will be well placed to acquire Tech companies in this environment. We expect to see increased activity by corporate purchasers in 2023 as they take the opportunity to acquire assets at more attractive valuations than were available in recent years.

The position of private equity firms and other financial investors is interesting. On the one hand, private equity activity may be constrained by more limited availability of debt finance across the M&A market as a whole (which is a result of the macro-economic outlook indicating an increased likelihood of defaulting borrowers in 2023 and lack of demand in the secondary debt market generally). On the other hand, private equity firms and other financial investors have a lot of dry powder that needs to be deployed and an ability to be flexible with deal structures (e.g. making minority investments rather than majority investments or full buy outs that may put them at an advantage relative to corporate buyers. This flexibility may also give them the ability to structure for the more limited availability of debt.

In addition to changes in the composition of buyers, we may also see changes in the type of M&A activity conducted. For example, the challenging macro-economic conditions may mean that we see an increase in distressed M&A and disposals of non-core assets. Similarly, we may see an increase in public-to-private transactions in countries whose currencies have depreciated against the dollar.

Aside from macro-economic conditions, antitrust and competition issues are likely to remain a concern for purchasers and investors in 2023. Tech M&A deals came under intense scrutiny during 2022, and we expect this heightened focus to continue going forward. For example, Microsoft’s proposed acquisition of Activision Blizzard remains under review in the EU and UK, and the U.S. FTC issued a complaint (challenging the deal) on 8 December. Similarly, the European Commission initiated an in-depth review of Broadcom’s proposed acquisition of VMWare on 20 December. As technology becomes increasingly important in the businesses of companies across all industries, the range of deals potentially coming under increased scrutiny will continue to broaden. As a result, it will continue to be important to assess the prospects of transactions at an early stage. Where competition/antitrust agencies have substantive concerns about a deal, recent developments in jurisdictions including the EU and UK have made it easier than ever for them to intervene. Further insight on trends and developments in antitrust and M&A can be found here.

Overall, the outlook for Tech M&A at the start of 2023 is more positive than it was at the end of 2022.17 18 Although we do not expect to see a return to 2021 activity levels this year, with a fair wind (e.g. stability and predictability in the markets, central banks containing inflation and/or a resolution to the hostilities in Ukraine) we might see a return to pre-pandemic activity levels in the sector.


1   NASDAQ Composite Index (

2   Global M&A Report Q3 2022 - PitchBook

3   Global M&A Trends in Technology, Media and Telecommunications: 2022 Mid-Year Update - PwC

4   ANALYSIS: 2023 M&A Market May Reveal a Return to Pre-2021 Levels – Bloomberg Law

5   Technology M&A declining in Europe, US as valuations converge – S&P Global Market Intelligence

6   Deal Drivers: Americas HY 2022; and Deal Drivers: Americas Q3 2022 – Datasite (data taken from ‘Heat chart based on potential companies for sale’ for Western US, Midwestern US, Southern US and Northeastern US)

7   Deal Drivers: Americas HY 2022; and Deal Drivers: Americas Q3 2022 – Datasite

8   Technology insights Q3 2022 – Grant Thornton

9   Headwinds to dealmaking remain persistent – S&P Global

10   United Kingdom And Republic Of Ireland M&A Review - EXPERIAN MARKETIQ: YTD 2022

11   Deal Drivers: EMEA HY 2022; and Deal Drivers: EMEA Q3 2022 – Datasite (data taken from ‘Heat chart based on potential companies for sale’ for UK & Ireland, DACH, France, Italy, Iberia, Nordics, Benelux and CEE & SEE)

12   State of European Tech 2022 - Atomico

13   Deal Drivers: APAC HY 2022; and Deal Drivers: APAC Q3 2022 - Datasite

14   Global M&A Trends in Technology, Media and Telecommunications: 2022 Mid-Year Update – pwc; and APAC Tech M&A Trends Report: Aggregate Deal Value Nearly Triples Since 2019 – S&P Global

15   Global M&A Trends in Technology, Media and Telecommunications: 2022 Mid-Year Update – pwc

16   Deal Drivers: APAC Q3 2022 - Datasite

17   Technology insights Q3 2022 – Grant Thornton

18   ANALYSIS: 2023 M&A Market May Reveal a Return to Pre-2021 Levels – Bloomberg Law

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